ASML Stock Analysis 2026: The $380 Million Monopoly Hiding in Plain Sight

There's exactly one company on Earth that can make the machines required to produce every advanced chip. Not two. Not three. One. ASML Holding has a literal monopoly on extreme ultraviolet (EUV) lithography, and every AI chip, smartphone processor, and cutting-edge semiconductor at 7 nanometers or below has to pass through their equipment.

Our systematic analysis gives ASML a 9/10 overall score with a perfect 10/10 moat rating, the highest moat score in our entire database. Here's why that makes sense, and why the stock still isn't a slam dunk.

What ASML Actually Does (And Why Nobody Can Copy It)

ASML builds lithography machines. These machines use light to etch circuit patterns onto silicon wafers, essentially the "printers" of the chip world. The latest EUV machines cost $200 to $380 million each. ASML ships about 50 to 60 per year.

Here's the part that matters for investors: each machine contains over 100,000 components sourced from 800+ suppliers. The optics alone come from Zeiss and take over two years to manufacture. Nikon and Canon, the only other companies that have tried, gave up on EUV after spending billions. They still make older deep ultraviolet (DUV) machines, but they can't touch the cutting edge.

Why replication is basically impossible: - Estimated $50+ billion and 10+ years to replicate the supply chain - Zeiss has an exclusive long-term partnership with ASML for EUV optics - Decades of accumulated know-how in managing mirrors, vacuum chambers, and plasma light sources - Each machine must align patterns at 13.5 nanometer wavelengths, which is roughly 1/4000th the width of a human hair

This isn't a normal competitive advantage. It's a physical monopoly built over 40 years of R&D.

The Numbers Behind the Moat

Our systematic scoring: - Overall Score: 9/10 - Moat Score: 10/10 (perfect, highest possible) - Management: 8/10 - ROE (5yr avg): 54.0% - ROIC (5yr avg): 35.3% - Debt-to-Equity (5yr avg): 0.32 - Free Cash Flow Positive: 4 out of 5 years

A 54% return on equity sustained over five years is extraordinary. For context, most great businesses earn 15 to 25% ROE. ASML nearly triples that. And they do it with almost no debt (0.32 D/E ratio), which means the returns aren't juiced by leverage. This is genuine operational excellence.

The 35.3% ROIC tells the same story from a different angle: every dollar ASML invests in the business generates exceptional returns. That's the financial signature of a monopoly.

Why AI Makes ASML More Valuable, Not Less

Every AI chip needs ASML's machines. NVIDIA's H100 and Blackwell GPUs? Made on TSMC's most advanced process using ASML's EUV lithography. AMD's MI300? Same. Google's TPUs, Amazon's Trainium chips, Apple's M-series processors? All of them.

The AI buildout is creating what semiconductor analysts call a "supercycle." TSMC alone plans to add 50+ machines through 2027. When hyperscalers like Microsoft, Amazon, and Google race to build AI data centers, they need more chips, which means more TSMC capacity, which means more ASML machines.

ASML's 2025 revenue came in around 30 to 33 billion euros, with a backlog exceeding 36 billion euros. Management has guided for revenue reaching 44 to 60 billion euros by 2030. That's roughly double where they are today.

The next-generation High-NA EUV machines started shipping in 2025 at roughly $380 million per unit. These are required for the most advanced chip designs at 2 nanometers and below. Intel and TSMC both took initial units. This platform locks in another decade of technological dominance.

The Risks That Keep This From Being a Perfect 10 Overall

Geopolitics Are Real

The Netherlands government, aligned with U.S. policy, blocked sales of EUV machines to China starting in 2023 and tightened restrictions on older DUV models in 2024. This permanently removes 10 to 15% of ASML's addressable market.

China was 49% of system revenue in 2024 as customers rushed to buy older machines before restrictions fully kicked in. Normalizing to under 20% in 2025 creates a multi-billion euro revenue headwind. The Chinese government continues to invest heavily in domestic semiconductor manufacturing, but replicating ASML's technology remains far out of reach.

Customer Concentration

TSMC, Samsung, and Intel account for over 90% of ASML's orders. If Intel's foundry ambitions falter (which is a real possibility given their financial struggles), one of ASML's three major customers effectively exits the cutting-edge market. That concentrates revenue even further in TSMC.

Cyclicality

Semiconductor spending is inherently cyclical. ASML's 2023 bookings dropped 50% in a single quarter when chip companies paused expansion plans. If AI spending plateaus or cloud companies delay factory buildouts, the order book can swing dramatically.

Valuation

At a market cap of roughly $546 billion, ASML trades at a premium that prices in years of growth. Our valuation score of -7 reflects this: the business is exceptional, but you're paying up for it. Historically, the best time to buy ASML is during semiconductor downturns when fear outweighs fundamentals.

The Service Business Nobody Talks About

ASML has over 1,000 machines installed worldwide. Each one needs ongoing maintenance, upgrades, and eventually refurbishment. This installed base management segment generates about 6 to 7 billion euros per year at 50%+ gross margins.

This is recurring revenue that grows with every machine shipped. And it provides meaningful downside protection during spending downturns because factories must maintain their equipment regardless of how busy they are.

Think of it like the razor-and-blade model, except the razors cost $380 million and the blades are service contracts worth millions per year. As the installed base grows, this revenue stream becomes an increasingly large and stable portion of ASML's business.

How ASML Compares to Other "Monopoly" Stocks

Several companies claim monopoly-like positions, but ASML's is arguably the most defensible in the stock market:

  • Visa and Mastercard dominate payment networks, but they face regulatory pressure and fintech competitors chipping away at the edges
  • Google dominates search, but faces antitrust action and AI-powered search alternatives
  • ASML faces no viable competitor in EUV lithography. Period. The barriers to entry aren't regulatory or network-based. They're physics-based and supply-chain-based.

Bottom Line: What Should Investors Do?

ASML is one of the highest-quality businesses in the world. A 10/10 moat score, 54% ROE, essential role in the AI revolution, and zero competition in its core market. You don't find that combination often.

The catch is valuation. At current prices, you're paying a significant premium for this quality. For long-term investors, ASML is the kind of company you want to own for decades. The question is whether to buy now or wait for a semiconductor downturn to get a better entry point.

Our approach: if you're building a position over time, ASML deserves a spot on your watchlist at minimum. If a geopolitical scare or semiconductor cycle downturn pushes the stock down 20 to 30%, that's historically been a strong buying opportunity for this caliber of business.

Want to see how ASML compares to other stocks? Use our stock screener to find more companies with wide moats, or check out the full ASML analysis page for detailed scoring.

Data and analysis from Moatifi's systematic stock scoring framework. For informational purposes only, not investment advice. Always do your own research before making investment decisions.