ASML Holding N.V. (ASML): A Bull Case Theory

Ricardo Pillai

Tue, Apr 15, 2025, 9:07 AM 3 min read

We came across a bullish thesis on ASML Holding N.V. (ASML) on Substack by Oguz Erkan. In this article, we will summarize the bulls’ thesis on ASML. ASML Holding N.V. (ASML)'s share was trading at $672.87 as of April 14^th. ASML’s trailing and forward P/E were 30.79 and 24.39 respectively according to Yahoo Finance.

An aerial view of a modern fabrication center with equipment for producing semiconductor components.

ASML is one of the last pure monopolies in the world, holding 100% market share in the extremely specialized field of Extreme Ultraviolet (EUV) Lithography Machines. These machines are crucial for manufacturing cutting-edge semiconductors, making ASML an indispensable player in the tech industry. Without its technology, companies like Nvidia, AI developments, and robotics would not exist. ASML is in a particularly strong position to thrive even amidst the growing global tariff landscape. Unlike many of its competitors, ASML’s customers are large semiconductor foundries, such as TSMC, which rely on long-term contracts for these high-tech machines. The long lead time required to build and deliver ASML’s products makes it unlikely that these customers will suddenly cancel orders due to short-term tariff concerns. Additionally, ASML's business model is further solidified by its significant revenue stream from maintenance and services, which accounts for 29% of its total income. As the installed base of ASML machines grows older, this service revenue is expected to expand. Despite these compelling advantages, ASML is currently trading at its lowest valuation in five years, making it an attractive investment opportunity. The company is also aggressively buying back shares, purchasing approximately 90,000 shares daily since January, signaling confidence in its future prospects. With a strong 5-year revenue growth rate of 16%, net profit margins of 40%, and a return on equity of 30%, ASML’s financials are robust. Its forward P/E ratio of 24 indicates a reasonable valuation, particularly considering the company’s monopolistic position and strategic advantages. For investors, ASML represents an exceptional long-term investment, with significant upside potential at current levels, especially given its strong buyback program and consistent growth trajectory.

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.