ASML Has a Monopoly on the Most Important Machine in Tech. Here's Why the Stock Is a Buy.

Due to antitrust laws and modern government intervention, true monopolies are few and far between today. Most companies that approach monopoly status are stopped by the state intervening in their attempts to create one.

That's why it's so surprising that one of the world's only true monopolies exists in an industry so critical to the global economy: Semiconductor manufacturing equipment.

I'm talking about ASML N.V. (NASDAQ: ASML), which is the world's only provider of extreme ultraviolet (EUV) lithography machines.

Image source: Getty Images.

Pass go, collect $400 billion

ASML is the pick-and-shovel play behind the entire tech industry.

Its EUV lithography machines are the only ones capable of etching semiconductor chips of 7 nanometers (nm) or smaller. Older deep ultraviolet (DUV) machines (which ASML also produces) can only etch larger chips.

Chips sized 7nm and smaller are needed for modern smartphones, artificial intelligence (AI) data centers, and cloud computing, just to name a few applications.

Each of ASML's EUV lithography machines is about the size of a bus and costs $400 billion new. It takes seven Boeing 747 jets or about 25 trucks just to ship one of these machines to a customer.

And they are in extremely high demand.

In its full-year 2025 results, ASML reported that its net bookings more than doubled from 5,399 in Q3 2025 to 13,158 in Q4 2025. Bookings for the whole of 2025 grew to 28,035, up from 18,899 in 2024.

That's not too surprising given that everyone needs advanced semiconductors, and every company that makes them needs ASML's EUV lithography machines to do it.

And being a monopoly does have its perks as evidenced by the rest of ASML's results.

Mr. Monopoly

ASML's revenue for 2025 totaled 32.66 billion euros, up 15% over 2024 and its basic earnings per share for the year grew 28.4% over 2024.

The company keeps a lot of that money in profit as well; it maintains a net margin of 29.42% and it manages its finances well. At present, the company has a debt-to-equity ratio of 0.22.

And despite its 75.99% share price growth over the past 12 months and its current share price of $1,291, ASML's price/earnings-to-growth (PEG) ratio is only at 2.06 right now. Of course, that means it might be overvalued compared to the ideal PEG of 1. But valuation is only really useful when you compare like companies.

However, there aren't any other companies to compare it to and given its status as a proper monopoly in a crucial industry, I don't see its growth slowing down anytime soon. Because ASML is unique as a one-of-one. That means it's simultaneously the most overvalued and undervalued company in its industry.

Its monopoly on the most important machines in the tech industry alone makes it worth considering. But its incredible financial position makes the case for ASML even stronger.

James Hires has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Boeing, and Netflix. The Motley Fool has a disclosure policy.