Is ASML Holdings a Buy?

The demand for artificial intelligence (AI) infrastructure is driving many stock prices higher, and one notable AI company benefiting is the Dutch semiconductor machine manufacturer, ASML Holdings (NASDAQ: ASML). The company's shares have surged 57% over the past year, easily outpacing the S&P 500's 17% gain.

That may seem modest compared to other AI stocks, but ASML has some critical advantages in very niche AI spaces, which could allow the company to benefit from AI for years to come. Here are a few reasons investors should consider buying ASML stock right now.

Image source: Getty Images.

1. ASML has a unique opportunity in AI

Many artificial intelligence companies exist, and some of them have far more style than substance. Investors don't have to worry about that with ASML. The company manufactures machines that produce advanced semiconductors, holding a 90% market share for lithography machines.

Its extreme ultraviolet (EUV) and high numerical aperture extreme ultraviolet (high NA EUV) machines are in high demand, as its customers -- including Taiwan Semiconductor, Samsung, and Intel -- purchase new semiconductor manufacturing equipment to capitalize on a significant increase in AI spending.

And there's virtually no concern that ASML will lose its competitive advantage anytime soon. Research from Morningstar estimates that ASML's advanced technology is a decade ahead of its competitors, and with annual investments of approximately 5 billion euros (about $5.9 billion) in research and development, ASML should easily maintain this competitive advantage.

2. AI spending will fuel demand for years

ASML doesn't just have a unique position in AI; it's also benefiting from a huge increase in spending on AI infrastructure. Every major tech company is ramping up their spending on AI processors, and that demand, in turn, fuels spending for ASML's machines.

Consider that Nvidia's management believes spending on AI infrastructure -- including semiconductor machinery -- will increase up to $4 trillion over the next five years. With ASML the far-and-away leader for building semiconductor machines, the company is perfectly poised to benefit from this growth.

ASML's management has said it has a backlog of orders for some of its most advanced machines, indicating that demand remains high. What's more, the company generates substantial revenue for each machine, reaching up to 300 million euros for a standard EUV and up to 370 million euros for a high-NA EUV machine. That means a few orders can begin to add significant revenue quickly.

3. ASML has recurring revenue opportunities from AI

In the first nine months of 2025, ASML's revenue was up 21% to nearly 23 billion euros, and diluted earnings per share rose 40% to $17.38 per share. Even more impressive is that the company's gross margins consistently remain in the low-50% range.

When ASML sells a semiconductor machine, it typically lasts for 30 years, which may seem like a bad thing for sales, but ASML has an additional revenue advantage because it also services the machines it sells. The company can generate substantial recurring revenue for decades every time it sells one of its machines.

Service revenue accounted for 26% of total sales in the first nine months of 2025 and reached 6 billion euros, up 39% from the same period in 2024. That's a good indicator that ASML's services are already benefiting from an influx in sales of its semiconductor manufacturing equipment.

With ASML's unique play in AI, the company's 90% market share in semiconductor equipment, and its persistent opportunity to service the machines it sells, this artificial intelligence company looks like a great stock to buy and hold for years to come.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Intel, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.