ASML: A Glimmering Monolith

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ASML Holding (ASML 2.19%), a name that trips rather elegantly from the tongue, has lately been the beneficiary of a certain… enthusiasm. A surge, one might say, in its share price – a January jaunt exceeding thirty percent, a doubling over the past year. The market, it seems, has decided to reward competence, a refreshing, if occasionally misplaced, tendency. But let us, as discerning observers of the pecuniary ballet, peel back the layers of this valuation, shall we?

The company, a Dutch confectioner of lithography machines – those intricate devices that etch the future onto silicon – finds itself in a position of enviable, almost suffocating, dominance. It is, quite simply, the sole purveyor of extreme ultraviolet (EUV) technology, a process as vital to modern chip fabrication as a well-mixed martini is to a civilized evening. The relentless hunger for processing power – fuelled by the insatiable maw of artificial intelligence – has, predictably, benefited ASML. The demand, one might say, is less a rising tide than a frothing, iridescent wave.

A Mosaic of Orders

The fourth quarter results revealed a revenue increase of five percent, reaching 9.7 billion euros (approximately $11.6 billion). A respectable figure, certainly, though one lacking the operatic grandeur one might expect given the prevailing narrative. Equipment sales climbed seven percent to 7.6 billion euros ($9.1 billion), while service revenue dipped a fractional one percent to 2.1 billion euros ($2.5 billion). Such granular details, I suspect, are often overlooked by the more excitable members of the investing public, who prefer to be swept away by broad strokes and soaring pronouncements.

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The company dispatched 94 new lithography systems and a mere 8 used ones during the quarter, a ratio that speaks volumes about the insatiable appetite for cutting-edge technology. Approximately 48% of sales stemmed from the pricier EUV technology, up from 42% a year prior. China, that enigmatic and perpetually scrutinized market, accounted for 36% of sales, a significant increase from 27%. This geographic concentration, however, is a matter deserving of… careful consideration.

But it was the orders, dear reader, that truly captured the attention. Net bookings soared to 13.2 billion euros ($15.8 billion), eclipsing analyst expectations of 6.2 billion euros ($7.4 billion). A substantial leap, undoubtedly, but one must ask: how much of this is genuine demand, and how much is anticipatory ordering, a preemptive strike against potential future constraints? The market, alas, rarely pauses to ponder such nuances.

Looking ahead, ASML forecasts Q1 revenue between 8.2 billion euros ($9.8 billion) and 8.9 billion euros ($10.6 billion), and a 2026 revenue projection of 34 to 39 billion euros ($40.6 to $46.5 billion), representing a growth rate of 4 to 19 percent. A respectable trajectory, to be sure, though hardly the exponential ascent some have predicted.

A Question of Valuation

ASML’s monopoly on advanced lithography is, undeniably, a formidable moat. However, its revenue growth, while solid, has not quite kept pace with the hyperbolic expectations surrounding the data center infrastructure boom. This discrepancy, I suspect, is largely attributable to restrictions on EUV technology sales to China, and a prior surge in demand for older machines. A temporary impediment, perhaps, but one that warrants acknowledging.

The stock, having already enjoyed a considerable run, appears…fully valued, at present. While I maintain a long-term favorable view of the company’s prospects, I would advocate a period of judicious observation. A pause, a moment to allow the market to recalibrate, and for a more compelling valuation to emerge. Patience, dear reader, is often the most rewarding investment of all. For in the grand theatre of finance, timing, like a perfectly mixed martini, is everything.

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2026-02-01 18:22