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We came across a bullish thesis on ASML Holding N.V. (ASML) on Substack by The Wolf of Harcourt Street. In this article, we will summarize the bulls’ thesis on ASML. ASML Holding N.V. (ASML)'s share was trading at $709.16 as of Feb 28th. ASML’s trailing and forward P/E were 35.14 and 27.86 respectively according to Yahoo Finance.
A worker operating a robotic arm in a semiconductor manufacturing facility.
ASML stands as the undisputed leader in semiconductor lithography, holding a monopoly on extreme ultraviolet (EUV) machines essential for advanced chip production. The company operates at the foundation of the semiconductor supply chain, supplying cutting-edge equipment to industry giants such as TSMC, Samsung, and Intel. ASML’s EUV machines, composed of over 100,000 specialized components, are critical for manufacturing the most sophisticated chips, with each machine commanding an average price of nearly €400 million.
Unlike many AI-driven semiconductor companies that have seen rapid revenue surges, ASML’s growth has remained steady but poised for acceleration. Revenue increased just 3% in 2024 due to the cyclical nature of the industry, but the company is entering a phase of renewed expansion. The upcoming deployment of the TwinScan EXE:5200, ASML’s most advanced lithography system, marks a significant leap in efficiency, allowing chipmakers to reduce processing steps from approximately 40 to single digits. Intel has already begun integrating these next-generation machines into production, reinforcing ASML’s technological dominance. Additionally, TSMC’s €10 billion semiconductor plant in Germany, expected to be operational by 2027, will further drive demand for ASML’s equipment.
Beyond AI, ASML’s influence extends across multiple industries, as semiconductor chips remain essential for consumer electronics, automotive technology, and industrial applications. Despite its market dominance, ASML trades at a reasonable 29 times forward earnings, offering a compelling valuation for a company expected to achieve nearly 20% annual earnings growth over the next three to five years. With strong long-term demand, a robust order pipeline, and continued innovation, ASML is well-positioned for sustained growth in the rapidly evolving semiconductor landscape.
ASML Holding N.V. (ASML) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 86 hedge fund portfolios held ASML at the end of the fourth quarter which was 64 in the previous quarter. While we acknowledge the risk and potential of ASML as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ASML but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.