Could This Equipment Maker Be the Hidden Winner of the AI Buildout?

There are plenty of flashy artificial intelligence (AI) companies for investors to choose from right now, and some could end up being great long-term investments. However, one angle in the AI boom that often gets overlooked is that there is a lot of complex manufacturing equipment that makes it all possible.

One company that dominates this space is ASML Holding (NASDAQ: ASML), which manufactures the equipment for semiconductor production. ASML is already benefiting from the rising demand for artificial intelligence processors, and could continue to be the winner as the AI buildout occurs.

While there are plenty of great AI investments right now, here's why ASML could continue to thrive as artificial intelligence infrastructure spending continues.

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ASML dominates the semiconductor equipment market

Technology companies are investing hundreds of billions of dollars in building new data centers to support their AI ambitions. The increase in spending is so high that Nvidia's management believes AI infrastructure spending will increase by up to $4 trillion by the end of the decade.

Much of the attention around AI spending focuses on how Nvidia will benefit from sales of its semiconductors -- and it will. But by zooming out a little, we can see that ASML also benefits immensely from this spending, because Nvidia wouldn't be able to make its processors without ASML's equipment.

The technical side of all this is that ASML builds extreme ultraviolet (EUV) and High Numerical Aperture Extreme Ultraviolet (High-NA EUV) machines so that its customers, including Taiwan Semiconductor Manufacturing, can produce the world's most advanced processors. Since ASML is one of the few companies in the world capable of making this equipment, the company holds 90% of the market for advanced lithography machines, giving it a dominant position that can't easily be overcome

This leading position has translated into impressive top- and bottom-line results for the company, with revenue rising 21% to nearly 23 billion euros, and diluted earnings per share up 40% to $17.38 per share in the first nine months of 2025.

And there's little concern that ASML will lose its leading position any time soon. Morningstar research indicates that the company is a decade ahead of its competitors' technology, providing ASML with a significant lead in the semiconductor equipment market.

Now is a good time to buy ASML shares

ASML has a long-term opportunity to benefit from AI that might not be fully appreciated. Consider that when ASML sells its semiconductor equipment, it stays in use for nearly three decades. The equipment's longevity is a huge opportunity because ASML services the equipment it sells, making each sale a longtail revenue opportunity.

ASML's services revenue rose 39% in the first nine months of this year to 6 billion euros, accounting for approximately 26% of the company's total sales. As more AI infrastructure is built in the coming years, ASML could make even more from its services revenue, and for years to come. That will help the company maintain its profitability and preserve its impressive gross margin in the low 50% range.

ASML's share price has increased by 49% over the past year, outperforming the S&P 500's returns of 15%. With those gains, you might assume that the stock is expensive, but ASML's shares have a price-to-earnings ratio of 34 right now, making it a relative bargain compared to the tech sector's average P/E ratio of 54.

ASML's dominant position in semiconductor manufacturing equipment, high margins, and longtail opportunities to benefit from equipment services mean that buying ASML stock now and holding it for years to come is a great way to benefit from the current AI buildout.

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