ASML, the Dutch maker of advanced lithography equipment, controls roughly 90% of the market for EUV and high-NA EUV machines and is viewed by Morningstar as about a decade ahead of competitors, supported by roughly €5 billion a year in R&D; its customers (e.g., TSMC, Samsung, Intel) are buying amid a projected AI-infrastructure spending wave that Nvidia estimates could reach as much as $4 trillion over the next five years. Management reports a strong backlog, with unit prices up to €300m–€370m, and the company delivered nearly €23bn in revenue in the first nine months of 2025 (up 21%), diluted EPS of $17.38 (up 40%), and gross margins in the low-50s; service revenue—recurring given machines last ~30 years—made up 26% of sales (€6bn, +39%). The combination of high-margin, hard-to-replicate equipment sales and multi-decade aftermarket service streams positions ASML to capture a disproportionate share of AI-driven semiconductor capex and generate durable cash flows, although the piece notes the Motley Fool’s Stock Advisor team did not include ASML on its current top-10 list.
ASML controls roughly 90% of the market for advanced lithography machines, including EUV and high-NA EUV systems, and Morningstar estimates its technology is about a decade ahead of competitors; the company also invests roughly €5 billion annually in R&D (about $5.9 billion). The stock has risen 57% over the past year versus a 17% gain for the S&P 500, underscoring strong investor enthusiasm for its AI-related exposure. Nvidia estimates AI infrastructure spending could reach as much as $4 trillion over the next five years, and ASML reports a meaningful backlog for its most advanced tools, with individual machine pricing up to €300 million for standard EUV and €370 million for high‑NA EUV. Those price points mean a small number of orders can materially move revenue and cash flow in the near term. Operational results through the first nine months of 2025 show revenue up 21% to nearly €23 billion and diluted EPS up 40% to $17.38, with gross margins in the low‑50% range; service revenue was €6 billion (26% of sales), up 39%, reflecting a multi‑decade recurring revenue stream because machines typically last ~30 years. Investors should note the Motley Fool Stock Advisor team did not include ASML in its current top‑10 picks, indicating there are alternative ideas despite ASML’s strong fundamentals.
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strongly positive
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