Prediction: ASML Could Be One of the Best Semiconductor Stocks of 2026

I just covered ASML (NASDAQ: ASML) recently, but the company released its Q4 2025 earnings a few days after I wrote that piece, and, well, they were pretty great, to say the very least. They've solidified my prediction that this company might be the best semiconductor play for 2026.

ASML is a unique company for many reasons, but most notably is its monopoly on extreme ultraviolet (EUV) lithography machines, of which it is the only provider.

Those lithography machines are absolutely essential for producing advanced semiconductors (anything 3 nanometer or smaller). Each machine is about the size of a bus and costs almost half a billion dollars.

The company's latest earnings report show that ASML's monopoly is extremely lucrative, and as it still has no competitors, it's one that's likely to continue for the foreseeable future. Let's take a deeper look at its incredible end to 2025.

Image source: Getty Images.

Banner year for ASML

I'll start with the most staggering number. In Q4 2024, the company received 7 billion euros' worth of new bookings. For Q4 2025, ASML received 13.15 billion euros' worth of bookings. That's an almost 88% increase year over year, and it shows that demand for ASML's products is growing at a blistering pace. Sales of EUV lithography machines grew 39% and totaled 11.6 billion euros, or just over one-third of the company's entire revenue for the year.

On top of that, ASML recorded net sales of 32.6 billion euros for 2025, a 15.5% increase over 2024. Net income topped 9.6 billion euros on the back of that, a 27% increase over 2024. And the company's earnings per share (EPS) shot up 28%.

To highlight how critical ASML's EUV machines are, both to its business and the global semiconductor market, it saw a 6% decrease in sales of its older deep ultraviolet (DUV) lithography machines to 12 billion euros for 2025. Yet despite that decrease, ASML still saw growth in just about every other financial metric.

ASML is also sitting on a gross margin of 52% and an operating margin of 35%. It grew its net cash position to $15.17 billion and reduced its total debt 21.5% to $3.18 billion, so it could pay all that remains off almost five times over.

ASML grew its free cash flow 29% to $12.42 billion and its operating cash flow 24.5% to $12.93 billion. And the company raised its dividend slightly, but it still yields a fairly low 0.52%.

That's not what you hold this stock for, though. For those holding ASML for appreciation, the 12 billion euro share buyback program the company announced in its Q4 results (to be executed by Dec. 31, 2028) is a much more enticing prospect than the dividend.

For 2026, ASML's domination looks set to continue. It's anticipating net sales to land between 34 billion and 39 billion euros and to maintain its impressive growth margin, holding between 51% and 53%.

By my math, ASML is worth looking at. With no competitors in sight either, ASML is set to continue enjoying the fruits of its effective monopoly on the EUV lithography machine market through this year and beyond. So too will its shareholders, especially with the prospect of a major share buyback scheme over the next two years.

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