What makes a growth stock stand out from the pack? How about a monopoly on a critical technology that will fuel a $700 billion industry for years to come?
That's ASML (ASML 2.66%) in a nutshell. The semiconductor equipment manufacturer has a lock on the lithography market, with a dominant market share and no viable competition for its extreme ultraviolet, or EUV, lithography technology.
ASML's High NA EUV systems, which push EUV technology further, are being adopted by Intel for its future process nodes. Foundry market leader TSMC has been slower to jump on board, sticking with standard EUV systems for now, but the company will eventually make the switch when it runs into the limits of the older technology. ASML's top-of-the-line High NA EUV systems are pricey, costing around $400 million per unit.
With ASML dominating its core market, growth investors with $1,000 available should seriously consider the semiconductor equipment giant.
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Wildly profitable
ASML's financial performance can be volatile, ebbing and flowing with capital spending from its large customers. The company sold 67 new lithography systems in the second quarter of 2025, generating 7.7 billion euros of revenue in the process. Around 2.1 euros of revenue came from installed base management services, while the rest came from lithography systems. Total revenue and the number of system sales were down slightly from the first quarter.
ASML managed a gross margin of 53.7% in the second quarter, and it produced net income of 2.3 billion euros. That's good for a net income margin of nearly 30%. The company is seeing progress in the memory chip market, and it shipped its first TWINSCAN EXE:5200B High NA EUV system in the second quarter. This new system is the second iteration of the company's High NA EUV technology, which enables high-volume production.
ASML expects to grow revenue by 15% this year. In 2026, the company isn't yet providing an outlook due to high levels of uncertainty. The macroeconomic environment, tariffs, and geopolitical developments are all wild cards that could impact sales.
Intel is another issue. The chip giant is an early adopter of ASML's High NA EUV systems, but future sales of those systems will depend on Intel getting its next-generation process nodes into volume production on time.
While these headwinds could hurt growth next year, ASML will still benefit from the long-term growth of the semiconductor industry.
Benefiting from the AI boom
Global AI infrastructure spending is booming, pushing up demand for cutting-edge data center GPUs that require the most advanced manufacturing processes. ASML's EUV systems play a critical role, and as long as the AI boom continues, ASML should continue to see a strong tailwind from the artificial intelligence (AI) industry.
Competition between TSMC, Intel, and Samsung could benefit ASML, as all three companies look to win a piece of the AI accelerator market. TSMC dominates the production of AI chips for now, but Samsung recently won a deal with Tesla to manufacture the carmaker's next-generation AI chips, and Intel needs to win external customers for its next-gen Intel 14A process node for its foundry business to remain viable.
While there is some risk that the AI boom slows down, a more competitive foundry business is ultimately a good thing for ASML.
A reasonable valuation
ASML stock trades around 27 times the average analyst estimate for 2025 earnings. While ASML's growth can be inconsistent, the company's dominant position in the lithography market and its sky-high profit margins more than justify the stock's price tag.
2026 may be a slower year for ASML as it reckons with a tough economic environment. In the long run, though, this dominant semiconductor equipment manufacturer looks like the perfect stock for a growth investing portfolio.
