ASML began with no customers and little room for error in a fiercely competitive market. Today, it holds an almost unassailable position in the global semiconductor industry.
ASML (Amsterdam: ASML) is the sole commercial supplier of EUV lithography systems, the machines at the center of advanced semiconductor manufacturing. Each system is about as large as a double-decker bus, weighs roughly 180 tonnes, and costs more than 180 million. Inside, lasers strike tens of thousands of tiny molten-tin droplets every second, producing a plasma that emits light at a 13.5-nanometre wavelength. That light prints the extraordinarily fine patterns used to make the most advanced computer chips.
In 2025, ASML booked revenue from 48 EUV systems and reported total sales of 32.7 billion, with 8.2 billion coming from servicing and upgrading machines already in use. The Dutch company builds the systems around a supplier network assembled over decades rather than making every part itself. Carl Zeiss of Germany produces the mirrors at the center of the optical system, while Trumpf provides the lasers that create EUV light. Other specialist firms supply parts such as wafer stages, sensors, and software.
TSMC, Samsung, and Intel can develop much of their own technology, thanks to their size and technical expertise. Leading-edge lithography is different: for that, they have almost nowhere else to turn besides ASML. Its machines cost a fortune, but falling behind in chipmaking would cost even more. How, then, did a struggling Dutch start-up gain such a hard-to-displace position? The bigger question is whether it can hold that lead as the industry moves into its next phase.
For now, little evidence suggests that anything is replacing leading-edge lithography. AI has raised demand for advanced logic and memory, and ASML says growth in both markets helped drive orders for its EUV systems in 2025. That remains the central long-term question for the investment case. Export controls may cut sales; a semiconductor downturn could postpone orders, while customers might grow more cautious about costly new tools. So far, no rival technology has reached commercial scale or displaced ASML's position in leading-edge lithography.
The outlook for shareholders
ASML gives shareholders both growth and a steady stream of recurring revenue. In 2025, sales reached 32.7 billion, gross margin was 52.8%, and net income came to 9.6 billion. Revenue from the installed base - mostly servicing and field upgrades for machines already operating in customer fabs - rose 26% to 8.2 billion. The picture improved further in 2026. ASML posted second-quarter sales of 9.3 billion and a 54% gross margin, then lifted its full-year revenue forecast to 43 billion-45 billion, compared with the earlier range of 34 billion-39 billion. The company attributes the stronger outlook to AI investment, which is increasing demand for advanced chips while prompting customers to speed up expansion plans.
ASML's longer-term opportunity is still substantial: its modelling estimates potential annual revenue of 44 billion to 60 billion by 2030, with gross margins ranging from 56% to 60%. These numbers describe a possible range, not a forecast. Even so, the sharp rise in 2026 guidance shows how quickly the business can expand, with AI providing much of the momentum.
AI is better understood as a catalyst than as the entire reason to own the stock. The sturdier argument rests on rising demand for computing power and the need for chipmakers to buy more capable manufacturing tools. ASML does not require every new semiconductor use to involve AI for its long-term prospects to hold up.
Still, ASML sells capital equipment, so its earnings depend on how much customers choose to spend. A customer may fully expect to need more capacity and still postpone an order for a year. That makes ASML's earnings more cyclical than its competitive edge might lead investors to expect.
Are ASML shares worth buying?
ASML has long traded at a premium because investors place a high value on the strength of its business. At roughly 1,700 a share, the stock sells for about 35 times consensus 2026 earnings and 25 times projected 2027 earnings. Those figures may be defensible if profits continue rising quickly. The company is targeting 43 billion45 billion in revenue for 2026, compared with 32.7 billion in 2025, and analysts expect earnings to increase again in 2027. Still, the valuation gives investors less protection if results disappoint. A softer semiconductor cycle, slower adoption of high-NA technology, or additional restrictions on China could lead the market to cut the multiple, even with ASML's competitive position unchanged.
A long-term investor has to ask whether earnings will expand quickly enough to support the current valuation. If they do not, the high multiple can deepen the losses. Better buying opportunities may appear when the semiconductor cycle weakens and attention shifts from the next decade to immediate orders.
The real issue for investors is simple: will ASML's future earnings be large enough to justify today's share price? Even a company that keeps growing can see its stock fall when the market has already priced in too much of that growth. ASML has spent four decades building one of the strongest competitive positions in the global economy. Now investors must decide whether that advantage can produce enough earnings to warrant the premium attached to the shares.
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