ASML has 90% of the market for advanced AI processor machines.
Data center infrastructure spending could grow by $4 trillion over the next five years, directly benefiting ASML’s equipment sales.
ASML has an ongoing recurring revenue opportunity from equipment services that can occur decades after the machine is sold.
10 Stocks We Like Better Than ASML
Demand for artificial intelligence (AI) infrastructure is driving many stock prices, and one notable AI company is benefiting from a Dutch semiconductor machine maker, ASML Holdings(NASDAQ: ASML). The company’s shares are up 57% over the past year, easily more than that S&P 50017% profit.
That may seem trivial compared to other AI stocks, but ASML has some significant advantages in several specific AI spaces, which could allow the company to benefit from AI for years to come. Here are some reasons investors should consider buying ASML stock now.
Image source: Getty Images.
Many artificial intelligence companies exist, and some of them have more style than substance. Investors don’t have to worry about that with ASML. The company manufactures advanced semiconductor manufacturing machines, holding a 90% market share for lithography machines.
Its Extreme Ultraviolet (EUV) and High Numerical Aperture Extreme Ultraviolet (High NA EUV) machines are in high demand, with customers including — Taiwan Semiconductor, Samsungand Intel — Buy new semiconductor manufacturing equipment to capitalize on the significant increase in AI spending.
And there is virtually no concern that ASML will lose its competitive advantage anytime soon. Research from Morningstar It is estimated that ASML’s advanced technology is a decade ahead of its competitors, and with an annual investment of approximately 5 billion euros (approximately $5.9 billion) in research and development, ASML should easily maintain this competitive advantage.
ASML not only has a unique place in AI; It is also benefiting from a huge increase in spending on AI infrastructure. Every major tech company is increasing its spending on AI processors, and that demand, in turn, fuels ASML’s machines.
Consider that NvidiaManagement believes spending on AI infrastructure — including semiconductor machinery — will grow to $4 trillion over the next five years. With ASML the far and away leader in manufacturing semiconductor machines, the company is fully poised to benefit from this growth.
ASML’s management said it has a backlog of orders for its most advanced machines, indicating demand is high. Furthermore, the company generates substantial revenue for each machine, reaching up to 300 million euros for standard EUV and up to 370 million euros for high-NA EUV machines. This means that some orders can quickly start adding significant revenue.
In the first nine months of 2025, ASML’s revenue rose 21% to nearly 23 billion euros, and diluted earnings per share rose 40% to $17.38 per share. What’s even more impressive is that the company’s gross margins consistently remain in the low-50% range.
When ASML sells a semiconductor machine, it usually lasts for 30 years, which may sound like a bad thing for sales, but ASML has an additional revenue benefit because it also Services machines that sell it. Can generate substantial recurring revenue for the company decades Every time it sells one of its machines.
Service revenue accounted for 26% of total sales in the first nine months of 2025 and reached 6 billion euros, 39% more than in the same period of 2024. This is a good indicator that ASML’s services are benefiting from the flood of sales of its semiconductor manufacturing equipment.
With ASML’s unique play on AI, the company’s 90% market share in semiconductor devices, and the continued opportunity to service the machines it sells, this artificial intelligence company looks like a great stock to buy and hold for years to come.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Intel, Nvidia, and Taiwan Semiconductor Manufacturing. Motley Fool has a disclosure policy.
Is ASML Holdings a buy? Originally published by Motley Fool
