ASML: A Most Promising Venture

by

Now, ASML, you see, has been doing rather well for itself of late – a doubling of the stock price in the last twelve months is, if I may say so, a jolly good show! The firm, a Dutch concern, has become something of a linchpin in the rather exciting world of artificial intelligence, providing the essential kit for the creation of these top-notch chips. But, dash it all, I suspect there’s even more upward momentum to be had, and for three reasons, as clear as a bell.

A Pick and Shovel Operation, What!

ASML, you understand, is the largest producer of lithography systems – a bit of a mouthful, I grant you – which are used to etch these circuit patterns onto silicon wafers. It’s rather like being the chap who supplies the picks and shovels to the gold miners – a decidedly advantageous position, wouldn’t you agree? And they’re not just any old systems; they’re the only producers of the high-end, extreme ultraviolet variety, used to create the tiniest, most densely packed chips imaginable. The leading foundries – TSMC, Samsung, and even the industrious chaps at Intel – all rely on ASML’s contraptions to produce their most sophisticated wares.

Then you have the fabless chipmakers – Nvidia, AMD, Broadcom, and Qualcomm, to name a few – who outsource the actual manufacturing to these foundries. Without ASML’s EUV systems, those foundries wouldn’t be able to produce the chips – including the latest AI marvels – and that, my dear reader, puts ASML in a rather powerful position. Fortune Business Insights predict the AI infrastructure market will grow at a rate of 29.1% from 2025 to 2032, and ASML, naturally, stands to benefit handsomely. A well-balanced way to profit, don’t you think, without having to worry about the squabbles amongst the chipmakers themselves?

Loading widget...

A Recovery in the Memory Market, By Jove!

ASML also caters to the memory chip manufacturers, like Micron, providing the systems for their DRAM and NAND chips. Now, the memory market, as any seasoned observer will tell you, is prone to these boom-and-bust cycles. There was a bit of a slump from 2022 to 2023, what with the PC and smartphone markets taking a breather and interest rates causing a spot of bother.

But things, thankfully, have begun to perk up. The PC and smartphone markets have stabilized, interest rates have eased, and the AI boom has created a demand for more solid-state drives and high-bandwidth memory. This expansion, analysts predict, will continue for at least another two years, complementing the demand for AI accelerator chips and giving ASML’s EUV sales a rather welcome boost.

Guidance Raised, A Most Promising Sign!

In 2024, ASML’s net sales saw a modest increase of 3%, with earnings per share taking a bit of a dip. This was due to export restrictions, a temporary slowdown in customer spending, and the introduction of their newer EUV systems. However, in 2025, things took a turn for the better. Net sales grew by a respectable 16%, gross margin expanded, and earnings per share increased by a cheerful 28%.

Orders spiked in the second half of 2025, boosting the year-end backlog to 38.8 billion euros. This prompted ASML to raise its 2026 revenue guidance to between 34 and 39 billion euros – a 12% increase at the midpoint, exceeding previous expectations. They’re even anticipating revenue of between 44 and 60 billion euros by 2030. A most encouraging outlook, wouldn’t you say?

A Valuation That’s Perfectly Justified, Old Sport

Analysts predict ASML’s earnings per share will grow at a rate of 22% from 2025 to 2027. The stock might seem a bit pricey at 42 times this year’s earnings, but its monopolization of the EUV market, its irreplaceable position in the semiconductor industry, and its exposure to the booming AI and memory chip markets all justify that higher valuation. A solid investment, I daresay, for the discerning investor.

Read More

2026-01-29 22:13