ASML (ASML 0.28%) is arguably one of the most important companies in the world that most people have never heard of before. However, without it, there would be no artificial intelligence (AI) boom or even smartphones.
The Dutch company makes what are known as extreme ultraviolet lithography machines, or EUV for short, which are the only systems that can print the smallest transistors on advanced chips. What makes ASML so unique is that it's the only company with this kind of technology. When it comes to EUV machines, there really isn't even a distant second company like there is for Nvidia (NVDA +2.26%) and AMD with graphics processing units (GPUs), or Taiwan Semiconductor Manufacturing (TSM +1.54%) and Samsung in the manufacturing of advanced chips.
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A true monopoly
ASML has what amounts to a monopoly that it built through years of research and billions of euros spent figuring out something nobody else could. A check of the sector suggests that competitors have given up trying to crack the EUV code to create viable alternative products. Meanwhile, China has reportedly recently been looking to reverse engineer one of ASML's older DUV (Deep Ultraviolet) machines, only to break it and then call ASML to service it.
If a foundry needs to increase capacity to manufacture more advanced chips, they need more EUV machines from ASML at a cost of around $220 million each. The price is steep, but foundries don't have a choice if they want to stay on the cutting edge. That's what happens when you're the only supplier of something the world's most advanced industries can't function without.
Meanwhile, ASML isn't just sitting still. It's rolling out its High-NA EUV platform, which pushes chipmaking another step forward by allowing even more precise transistor placement. These machines are even more expensive, costing nearly $400 million.
The three leading foundries have all accepted or placed orders for the new machines, with Intel (INTC +0.22%) and Samsung leading the way. TSMC has pushed back on the price, but the reason it is where it is today is because of timely EUV adoption. It eventually knows it can't be left behind with High-NA EUV. As such, High-NA EUV systems should be a big growth driver for ASML in the future, even if it does take some time to develop.
The company is also thinking about what's next. It recently took a small stake in Mistral AI, which is a way to stay close to the technology trends that will drive future semiconductor demand. It's not a needle-mover financially, but it shows ASML understands where the industry is heading.
In the near term, China is the biggest uncertainty. The company is restricted from selling its EUV systems there, but Chinese chipmakers have been buying up its older DUV machines as fast as they can get them. That created a surge of orders as companies tried to front-run additional export limits. ASML has said this pull-forward will likely fade next year, so revenue from China should dip. However, that's more of a short-term headwind than a real structural problem. Once that excess demand clears, growth should again be driven by foundries in Taiwan, Korea, and the U.S.
NASDAQ: ASML
Key Data Points
At the same time, ASML's main customers -- TSMC, Samsung, and Intel -- are all investing heavily in future capacity. Intel's renewed foundry push, helped by a rare investment from the U.S. government, is a tailwind, and Samsung is also stepping up its chip ambitions. TSMC, meanwhile, remains the clear foundry leader and is aggressively building new fabs around the world.
Is the stock a buy?
The stock has already made a big move this year, and it's not cheap, trading at a forward price-to-earnings (P/E) ratio of 34 times 2026 analyst estimates. However, this is a company that has a monopoly on the technology that is helping power one of the most monumental technological shifts of our era. While results could be lumpy, this is a growth stock you can buy and hold for the long term, given its dominant market position.
