ASML Holding N.V. (ASML) Stock Analysis

ASML’s primary competitive advantage is its near-monopoly in extreme ultraviolet (EUV) lithography, the critical technology for manufacturing the world’s most advanced semiconductors. As of 2025, ASML is the only supplier of EUV systems globally; neither Nikon nor Canon, its closest rivals, have commercially viable EUV offerings. This technological lead is protected by a deep intellectual property portfolio and decades of co-development with key customers such as TSMC, Samsung, and Intel.

The company’s scale and complexity create formidable barriers to entry. Each EUV machine contains over 100,000 parts and costs upwards of €200 million. Switching costs for customers are high, as fabs are designed around ASML’s systems and require years of process integration. Service and upgrade contracts generate recurring revenue, with DUV (deep ultraviolet) systems alone yielding service income exceeding 130% of their original sale price over their lifecycle.

ASML’s R&D intensity—€4.3 billion in 2024, or roughly 15% of sales—sustains its innovation lead. Its global service network ensures high uptime, a critical factor for chipmakers’ yields and profitability.

While export controls and geopolitical risks (notably in China, which accounted for 36% of 2024 revenue) are threats, ASML’s technological moat, customer lock-in, and robust financials (51% gross margin in 2024) underpin a durable competitive edge unmatched by peers.