What ASML makes
ASML, based in Veldhoven in the Netherlands, builds lithography machines for the chip industry. Lithography is the step that turns a blank silicon wafer into a chip. The machine uses light to project the pattern of the circuits onto a light-sensitive layer. This pattern is then transferred into the material. The process repeats many times until billions of transistors and their connections have been created.
The shorter the wavelength of the light, the finer the structures that are possible. ASML’s most advanced machines work with extreme ultraviolet light, EUV for short. Its wavelength is only 13.5 nanometers. According to ASML’s product page, this produces the smallest structures that can be manufactured in volume today. Without EUV, there would be no current smartphone processors and no leading AI chips.
Why ASML has a monopoly in EUV
ASML is the only company in the world that builds EUV machines in volume. CNBC describes the systems as machines costing around $200 million, without which no advanced chip can be made. The competition lost the race. According to an analysis by The Motley Fool, Nikon worked on EUV for almost twenty years and gave up around a decade ago.
This monopoly does not rest on a single patent. It rests on decades of development work, a network of hundreds of specialist suppliers and close collaboration with the chipmakers. A new supplier would have to rebuild this entire lead. The picture is different for the older DUV machines. There, ASML still competes with Japanese manufacturers such as Nikon and Canon.
Why I am looking at ASML right now
In mid-July 2026, ASML raised its annual forecast significantly. Even so, the stock lost noticeable value in the weeks that followed. At the beginning of August 2026, wallstreetONLINE (in German) described a sharp monthly decline. The main trigger was reports of Chinese progress with domestic lithography technology.
I find this combination interesting. A company delivers record figures, and the price falls anyway. Then the market is either pricing in a new risk, or it is correcting old exaggerations. You can only tell the two apart if you look at business, technology and valuation one by one. That is exactly what I do in this analysis.
High-NA is the next machine generation
The newest generation of equipment is called High-NA. It uses larger optics and exposes even finer structures than previous EUV systems. According to TechPowerUp, a single machine costs around $380 million. Intel is so far the most visible user. According to a report on the second quarter, the group wants to use the technology for selected processors in its Core Ultra 3 series.
The ramp-up remains deliberately slow. According to the same report, ASML expects four to five High-NA systems to contribute to revenue in 2026. In addition, around 65 conventional EUV systems are due to be shipped. For 2027, TechPowerUp cites a plan of 56 Low-NA systems and 10 High-NA systems. So High-NA is not yet a mass business. It secures the technical lead for the coming years.
Few customers, large orders
ASML’s customer list is short. The most important buyers are the contract manufacturers and chip groups TSMC, Samsung and Intel. CNBC names these three as the central buyers of the EUV fleet. Thanks to the AI build-out, memory makers such as SK Hynix are now also ordering on a large scale, as the delivery planning reported by TechPowerUp shows.
This concentration has two sides. Customers cannot get around ASML. But ASML depends just as much on the investment plans of a few boards. If a major customer postpones a new fab, billions in revenue are missing immediately.
The current figures
The second quarter of 2026 was strong. According to its official quarterly announcement, ASML reported revenue of €9.3 billion, net profit of €2.9 billion and a gross margin of 54.0%. Revenue was 21.2% above the prior-year quarter. For the full year 2026, the company now expects revenue of €43 to €45 billion. In the annual announcement for 2025, the range was still €34 to €39 billion, after revenue of €32.7 billion in 2025. So ASML raised its target considerably over the course of the year.
Order intake comes with a peculiarity. Since the start of 2026, ASML no longer publishes quarterly figures for order intake, as EBC Financial Group explains. The reasoning: large orders come in irregularly and distort the quarterly picture. Management most recently described order intake only as “very strong”. The last official figures come from the annual announcement for 2025. In the fourth quarter of 2025, orders worth €13.2 billion came in, of which €7.4 billion were for EUV systems. For the full year 2025, the figure was €28.0 billion, with an order backlog of €38.8 billion at year-end.
Then there is the service business, which ASML calls Installed Base Management. It covers maintenance, spare parts and upgrades for the installed machines. In the second quarter of 2026, it brought in €2.8 billion, almost a third of revenue. A machine once delivered often runs for decades and needs ongoing support. That is why this revenue is much more predictable than the fluctuating machine sales. Shareholders also receive a dividend. For fiscal year 2025, according to aktien.guide (in German), it came to a total of €7.78 per share, supplemented by share buybacks.
ASML is expanding for the coming years. According to the quarterly announcement, the company plans around 30% more capacity for EUV and DUV immersion systems by 2027. A further expansion of 30% for 2028 is under review.
The key risks
Export policy around China. ASML has never been allowed to ship EUV machines to China. Older DUV systems have been subject to growing restrictions since 2023. According to The Motley Fool, a US bill called the MATCH Act would additionally ban DUV immersion exports and the servicing of existing systems in China. At the start of 2026, ASML expected only around 20% of revenue to come from China, after 33% in 2025. There is also movement in the opposite direction. In July 2026, CNBC reported on a DUV tool allegedly developed in China. The report comes with many caveats. But it shows that China wants to build its own lithography.
Cyclical customer investment. Chip factories are built in waves. Years of record orders are regularly followed by years of restraint. That is why ASML’s order intake has always fluctuated strongly. The planned capacity expansion amplifies this risk. When the next downturn comes, it will hit a company with much larger and more expensive manufacturing.
Valuation. After the strong rise, the stock is highly valued. Börse Express (in German) cites a forward P/E ratio of around 45 based on earnings estimates for 2026. That means you are paying for many future years of profit in advance. A level like this leaves little room for disappointment. If the company delivers less than expected, the share price can react much more sharply than the business itself.
Three checks before a decision
First, the business. Is revenue growing, and is the gross margin holding its level? With ASML, it is also worth looking at the service business. It shows how stable the base is beneath the fluctuating machine sales. A single record quarter proves little. Only several quarters in a row give a reliable picture.
Second, the trend. I check whether the price trades above its long-term moving averages and in which direction these lines are moving. This does not replace a valuation. But it shows whether a decision goes with the market or against it.
Third, momentum. After strong moves, the Relative Strength Index helps to put things into context. An extreme value alone is not a signal. Together with business and trend, it shows whether a situation is overheated or already washed out.
For me, leveraged products do not belong in this check. Leverage shortens the time horizon and can end a position before the actual thesis has had a chance to prove itself.
My conclusion on ASML stock
ASML controls a bottleneck of the entire chip industry. Without the machines from Veldhoven, no modern processor and no AI accelerator gets made. The figures from summer 2026 show a company that is delivering in the middle of the AI build-out and raising its targets. The service business lays a stable foundation underneath.
Even so, a monopoly does not automatically make a stock a good investment. Export policy, the customers’ investment cycle and the high valuation remain real risks. If you assess ASML stock, you should therefore answer the same questions as for any other stock. What does the company earn, where is the trend heading, and how much future is already in the price? This analysis gives you the facts for that. The decision remains yours.