In every major technological shift, there's a company quietly powering it from behind the scenes. For the artificial intelligence boom, that company is ASML Holding (ASML 0.32%).
The Dutch firm doesn't make chips like Nvidia or Intel -- it builds the machines that make those chips possible. Its technology sits at the heart of modern computing, and as AI accelerates demand for cutting-edge semiconductors, ASML's role is becoming even more critical.
Here's why investors are paying attention to ASML now.
Image source: Getty Images.
What does ASML do and why does it matter?
ASML builds lithography systems -- machines that chipmakers use to "print" billions of tiny circuits onto silicon wafers. Those circuits form the brains of our digital world: powering smartphones, data centers, cars, and virtually every AI model running today.
If semiconductor manufacturing were a printing process, ASML's systems would be the ultra-precise printers that bring chip designs to life. Using beams of ultraviolet light, these machines etch patterns thinner than a strand of hair. That precision defines how powerful, efficient, and advanced a chip can be.
Its crown jewel is Extreme Ultraviolet (EUV) lithography -- a technology so complex that ASML is the only company on the planet capable of building it. Each EUV system costs more than $200 million, weighs over 180 tons, and contains more than 100,000 parts.
EUV machines are indispensable for producing the most advanced chips that drive iPhones, GPUs, and high-performance AI servers. Without ASML, those chips couldn't be made.
That explains why ASML counts Taiwan Semiconductor Manufacturing, Intel, and Samsung Electronics as its biggest customers. It's the one supplier the entire semiconductor industry depends on.
How AI changes the equation
Artificial intelligence is creating a once-in-a-generation upgrade cycle across the chip industry. Every new AI model demands more computing power, and that power comes from denser, faster, more energy-efficient chips.
To make those chips, manufacturers need ASML's machines. That link is direct and consequential: as AI spending grows, so does demand for ASML's equipment. Each new fab, node, and GPU generation pushes more orders toward ASML since these advanced chips can only be produced using ASML's EUV technology.
What excites long-term investors is that this isn't a short-term cycle. It's a structural shift. AI workloads are becoming a core layer of the global economy -- embedded in cloud computing, automotive systems, healthcare, and beyond.
ASML is also preparing its next leap forward: High-NA EUV (High Numerical Aperture). These next-generation machines push lithography to new limits, allowing chipmakers to print even finer patterns. Intel has already ordered the first machine, which sells for over $400 million each.
Put simply, AI isn't just a tailwind for ASML -- it's a secular growth driver that could define its next decade of growth.
Why ASML's moat keeps widening
ASML's dominance is not an accident -- it's the product of decades of persistence, collaboration, and near-impossible engineering. The company spent a few decades and tens of billions of dollars perfecting EUV technology.
Each EUV machine operates in a vacuum, uses light generated from a plasma hotter than the surface of the sun, and aligns components with atomic precision. Replicating that isn't just expensive--it's nearly unthinkable.
Even if a competitor started today, it would likely take years, if not decades, to reach commercial viability, assuming it could even build the same supplier network. That's why ASML effectively has a technological monopoly in EUV lithography.
The company also enjoys deep, sticky relationships with its customers. Every ASML tool is calibrated specifically for a customer's process, creating years of collaboration and data exchange. Once a fabrication plant is built around ASML systems, switching suppliers isn't realistic.
And because its machines are strategically vital, ASML has become a focal point in geopolitics. The Netherlands and the U.S. have restricted exports of their most advanced systems to China, underscoring how essential the company has become to national security and global supply chains.
That combination -- technical lead, customer lock-in, and geopolitical importance -- creates a moat that few companies can match.
What does it mean for investors?
ASML isn't a chipmaker; it's the company that makes modern chips possible. Its EUV systems sit at the center of every technological advance that matters -- from AI to smartphones.
For investors, it represents something rare: a company with near-unshakable competitive advantages, a clear growth runway, and a business model that scales with the future of technology itself. It's a company worth keeping on your radar.
