ASML Holding (ASML) Hold Thesis Brief

Sector Classification: Semiconductor Manufacturing Equipment

Layer: Chip Manufacturing (the machines that make the chips)

Verdict: Buy and hold. ASML is a true monopoly on the single most important machine in the modern economy. This is a position to own for years and add to on dips, not to trade.

Why I Own It (Plain English)

Every advanced computer chip in the world (the ones powering AI, phones, data centers) is made using a process called lithography, which is essentially printing unimaginably tiny patterns onto silicon. The most advanced version of this is called EUV (extreme ultraviolet) lithography, and ASML is the only company on Earth that makes EUV machines. Not the best, the only.

If a chipmaker like TSMC, Samsung, Intel, or SK Hynix wants to make a cutting-edge chip, they have no choice but to buy from ASML. There is no competitor. These machines cost hundreds of millions of dollars each, take years to build, contain hundreds of thousands of parts, and require a global supply chain that took decades to assemble. No one can simply decide to compete with ASML; the barrier to entry is one of the widest in the entire economy.

The simple way to think about it: in the AI gold rush, everyone is buying picks and shovels (NVIDIA chips, data centers, power). ASML makes the one machine without which none of those picks and shovels can be manufactured in the first place. It sits at the very top of the funnel for the entire semiconductor industry.

I own ASML because it is one of the rare businesses with a genuine, durable, almost-unassailable monopoly on something the world needs more of every year.

Where ASML Sits in the Chain

ASML is the chokepoint at the start of the whole semiconductor supply chain. Roughly the order is:

Catalysts (What Could Drive It Higher)

Metric	Result	What It Means
Quarterly revenue	€8.8B, up 13% year-over-year	Steady growth at massive scale
Gross margin	53%	Monopoly-level profitability
Net income	€2.8B	Hugely profitable
EUV system sales	€4.1B (about 65% of system sales)	The crown-jewel product is the main driver
2026 full-year guidance	Raised to €36B-€40B	Management is more confident, not less
Order backlog (year-end 2025)	~€38.8B	Multiple years of revenue already booked
2030 revenue target	€44B-€60B	A long runway of growth ahead

High-NA EUV ramping up. ASML's next-generation machine (High-NA EUV) is just beginning to roll out to customers. As these even more advanced and more expensive machines start shipping in volume, they add a whole new layer of growth on top of the existing business.

Memory becomes a second engine. Historically EUV demand came mostly from logic chips. Now memory makers (the companies building the HBM memory that AI chips need) are adopting EUV too. This effectively gives ASML a second independent growth cycle.

Continued AI capital spending. As long as the big chipmakers and cloud companies keep racing to build AI capacity, they keep ordering ASML machines. Each new wave of AI investment flows back to ASML at the source.

Guidance raises. ASML already raised its 2026 outlook once this year. Further upward revisions, or strong order numbers each quarter, tend to reassure the market and support the stock.

Key Risks (What Could Go Wrong)

It is cyclical. The semiconductor industry moves in boom-and-bust cycles. Even with a monopoly, ASML's sales can slow sharply when chipmakers pause spending. The stock can fall hard during these down-cycles even though the long-term franchise is intact, which is exactly what creates the dip-buying opportunities.

China and export restrictions. A meaningful chunk of past sales went to China, and governments (especially the U.S. and Netherlands) have been restricting what ASML can sell there. China fell to about 19% of system sales recently, down from 36%. Further restrictions could pressure that part of the business, though it is concentrated in older, lower-margin machines.

Customer concentration. ASML sells to a tiny number of giant customers (TSMC, Samsung, Intel, SK Hynix). If even one of them delays a major fab project, it can move ASML's numbers noticeably in a given quarter.

High expectations. ASML is widely recognized as a great business, so the stock is rarely cheap. When expectations are high, even good results can disappoint if they are not great, leading to short-term drops. This is a reason to buy dips patiently rather than chase highs.

ASML

ASML Holding (ASML) Hold Thesis Brief

Why I Own It (Plain English)

Where ASML Sits in the Chain

What the Business Looks Like Right Now

Why It's a Buy and Hold

Catalysts (What Could Drive It Higher)

Key Risks (What Could Go Wrong)

Bottom Line

Reference Material