ASML is up. A lot. Seventy-nine-and-a-half percent in a year. The Nasdaq? Twenty-two-and-a-quarter. The tech sector? Twenty-six-and-eight-tenths. Numbers. They mean something, I suppose. So it goes.
The analysts, bless their hearts, think ASML will earn $29.69 a share in 2026. Then $37.51 in 2027. A nice little climb. But the stock? It’s trading at 35.1 times those 2027 earnings. Expensive. Very expensive. But then, what isn’t these days?
All Roads Lead to ASML
Amazon, Microsoft, Alphabet, Meta. They’re all buying chips. For their AI data centers. Nvidia and Broadcom make the chips, mostly. But they don’t make them, not really. They design them. They dream them up.
Taiwan Semiconductor, Samsung, Intel. Those are the ones with the factories. The big, clean, quiet factories. Filled with machines that cost more than some small countries. They’re making the chips. And those machines? Many of them are made by ASML.
ASML makes the things that make the things. It’s a peculiar position to be in. A kind of cosmic bottleneck. They have a near monopoly on lithography. It’s a fancy word for shining light through tiny patterns. But it’s essential. Without it, your phone stays a brick. So it goes.
They spent over six billion euros, and seventeen years, figuring out extreme ultraviolet lithography. EUV. It bounces light off mirrors, in a vacuum. Instead of using lenses. It’s complicated. It allows for more transistors on a chip. More layers. Better performance. It’s hard to copy. Not just because it’s advanced, but because it’s designed for volume. For making a lot of chips, quickly. That’s what the manufacturers need. And they’re willing to pay for it.
The latest machines, the high-NA ones, are in demand. They accounted for a small portion of bookings last quarter, but they’re coming. The future is expensive. So it goes.
ASML is Worth Its Premium Price
ASML makes incredibly complex products. But the idea is simple. AI needs chips. Chips need fabs. Fabs need ASML. It’s a tidy little arrangement. And we’re still in the early stages. There’s a runway for growth. A long one, probably.
But it’s not just about AI. They still make machines for regular chips. The deep ultraviolet ones. DUV. They work alongside the EUV machines. And servicing those machines? That’s a big part of their business. A quarter of their revenue. A steady income, in a world of chaos. So it goes.
The stock might cool off. It probably will. Earnings need to catch up. Valuations always do, eventually. But the fundamentals are solid. ASML has a good chance of outperforming the market. It might even be the first European company to reach a trillion dollars in market capitalization. A curious thing, isn’t it? A trillion dollars. What could you even do with a trillion dollars? Probably just make more machines. So it goes.
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2026-03-24 13:12