What happened

Shares of ASML Holding (ASML -2.36%) popped as much as 18.4% this week, according to data from S&P Global Market Intelligence. The semiconductor equipment company posted a strong earnings report and dismissed any concerns over the U.S. government's new export bans to China. As of the close on Thursday, Oct. 20, shares of ASML are up 15.3% this week.

So what

On Wednesday of this week, ASML released its earnings for the three months ending in September. Revenue was 5.78 billion euros for the period, up from 5.4 billion a year ago, and beat analyst expectations of 5.41 billion euros. Net income was 1.7 billion euros, which also beat analyst forecasts of 1.42 billion for the quarter. These two numbers are the key reason ASML stock jumped after the report, as investors were too pessimistic about the company's prospects this quarter.

Besides these impressive financials, ASML's management gave commentary about the U.S. government's recent export controls on semiconductor equipment to China. ASML will be affected by these new rules, with the company telling all its U.S. personnel to leave the country immediately after the order was announced.

Investors decided to sell off ASML stock in response to this new rule, bringing shares down over 10% last week. However, during this report, ASML's management said that these new export controls would have a limited impact on its 2023 equipment sales -- a nice surprise.

See, ASML makes the most advanced semiconductor equipment machines in the world and has moved the industry further along the cutting edge for data centers and products like smartphones. The U.S. government doesn't want ASML to sell these advanced machines to China for geopolitical purposes, which many investors thought would hurt ASML's sales. However, the company must have enough demand from customers like Taiwan Semiconductor Manufacturing, Intel, and Samsung to find orders for its current production capacity.

Now what

Even though it is one of the most important companies geopolitically, the investing thesis with ASML is quite simple. The company has a monopoly on the most advanced semiconductor manufacturing equipment, meaning that manufacturers have nowhere else to buy if they want to make the most advanced computer chips. This gives ASML consistent demand, zero competition, and pricing power for its products. That is an easy recipe for steady financial growth, which the company has put up over the last decade.

As long as the world still wants advanced computer chips, ASML's business should be fine, regardless of what happens with China.