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As NVIDIA and TSMC shrink the chip designs, they need ASML to photo-etch at 2nm
ASML expects 2025 revenue 15% with consistent profitability near 52% gross margin
Estimates could rise again after BofA just lifted its 2027 Semi forecast to $1 trillion
ASML Holding N.V. ((ASML - Free Report) ) is the world’s sole manufacturer of extreme ultraviolet (EUV) lithography systems, indispensable for fabricating sub-4nm semiconductors that power AI, data centers, and advanced consumer electronics. Its primary customers include the major semi foundries like TSMC ((TSM - Free Report) ), Samsung, and Intel ((INTC - Free Report) ).
For reference, the width of human hair is approximately 50,000 to 100,000 nanometers (nm) and the coronavirus is about 50 nanometers. Etching transistor channel width at under 10nm requires precision laser instruments.
Headquartered in Veldhoven, Netherlands, ASML provides both EUV and deep ultraviolet (DUV) photolithography machines that enable continued adherence to Moore’s Law by etching nanoscale transistor patterns onto silicon wafers with extreme precision.
In this report, we'll go over the technology, the financial outlook, and the market TAM.
Technologically, ASML’s advantage lies in its EUV platform using 13.5nm wavelength light produced by tin plasma lasers, supported by precision optics from Zeiss. Its new High-NA EUV systems, with 0.55 numerical aperture, offer up to 70% finer resolution, enabling next-generation chips for AI and quantum computing applications. These machines can cost over €350 million each, representing the pinnacle of semiconductor equipment engineering.
ASML’s lithography platforms -- EUV (Extreme Ultraviolet) and DUV (Deep Ultraviolet) -- represent two distinct generations of semiconductor manufacturing technology, each critical to different process nodes and chip applications.
Wavelength and Resolution: EUV systems use light at 13.5 nanometers, enabling far finer patterning and transistor density for nodes at 7nm, 5nm, and below. DUV machines operate at 193 nm or 248 nm, appropriate for nodes > 10nm but less suited to extreme miniaturization.
Optical Architecture: EUV relies on reflective optics because 13.5 nm light is absorbed by air and glass, requiring vacuum chambers and multilayer mirrors to project circuit patterns. DUV uses refractive lenses in standard cleanroom environment, making it less complex and faster in throughput.
Light Source and Cost: EUV generates its light via laser-produced plasma (LPP)—firing lasers at molten tin droplets to produce high-energy EUV photons. This results in higher complexity, lower throughput, and per-system costs often surpassing €350 million. DUV tools rely on excimer lasers, providing greater maturity, reliability, and lower cost per wafer.
Applications and Roles: EUV prints the most intricate chip layers for advanced logic and memory (critical for AI and HPC), while DUV still handles less critical or less dense layers, even on modern chips. DUV remains widely used in legacy nodes and mature fabs, including many in China that lack EUV access due to export controls.
In essence, DUV remains indispensable for high-volume, lower-cost manufacturing, whereas EUV is the cornerstone of next-generation semiconductor scaling enabling today’s high-performance computing revolution.
Why ASML is a Zacks #1 Rank Again
ASML reported its Q3 results on October 15 and in the week since, EPS estimates for this year and next popped nicely. The full year 2025 Zacks Consensus rose from $28.15 to $29.08 and next year's profit projection climbed from $29.15 to $30.14.
The company expects full-year revenue growth of about 15% with consistent profitability near 52% gross margin, driven by surging EUV demand in logic and DRAM segments, especially for sub-3nm nodes.
The Semi Market in an AI Boom
ASML’s total addressable market (TAM) exceeds $1 trillion by 2030, reflecting semiconductor expansion into AI, automotive, and high-performance computing. Within this, lithography tools account for €40-60 billion of direct annual equipment demand potential as fabs across the U.S., Asia, and Europe ramp high-volume advanced-node capacity.
Its de facto monopoly in EUV technology and deep customer integration with TSMC, Samsung, and Intel position ASML as one of the most strategically vital and defensible semiconductor capital equipment investments globally.
ASML’s TAM is shaped by its role as the sole supplier of advanced lithography systems essential to semiconductor scaling. By 2030, the company expects the semiconductor industry to surpass US$1 trillion in total sales, with lithography capturing a key share of this value chain.
Total TAM Overview: ASML targets €44-60 billion in annual revenue by 2030, implying around 4-6% share of global semiconductor spending, supported by gross margins of 56–60%. Industry forecasts place the global lithography equipment market near US$43.7 billion by 2030, up from US$27.8 billion in 2025, reflecting a 6-8% CAGR.
End-Market Exposure: AI-related datacenter, HPC, and networking chips are projected to contribute ~40% of semiconductor demand by 2030, driving the bulk of EUV system sales. Mainstream markets like smartphones, PCs, and automotive will continue moderate growth but represent a smaller share of ASML’s mix.
This week, Bank of America updated its forecast for global semiconductor sales, with the headline that they expect the industry to reach nearly $1 trillion by 2027, over 15% above earlier projections for $860 billion.
While the bank's favorite chip-making names are still NVIDIA ((NVDA - Free Report) ), AMD ((AMD - Free Report) ), and Broadcom, BofA also raised its forecast for chip equipment investment to $118 billion in 2025 and up to $138 billion by 2027. They see complexity in manufacturing as driving long-term capital intensity higher.
This means that Lam Research ((LRCX - Free Report) ), and KLA Corp, and ASML are all seen as key beneficiaries of surging AI and data center spending. The BofA semi analyst team said the AI buildout looks “structurally more durable” than past tech cycles.
In summary, ASML’s addressable market expands across EUV, DUV, and software ecosystems, all underpinned by global re-industrialization and AI-accelerated transistor scaling. This positions ASML to remain the linchpin enabling next-generation semiconductor performance through 2030.
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Bull of the Day: ASML Holding (ASML)
Key Takeaways
ASML Holding N.V. ((ASML - Free Report) ) is the world’s sole manufacturer of extreme ultraviolet (EUV) lithography systems, indispensable for fabricating sub-4nm semiconductors that power AI, data centers, and advanced consumer electronics. Its primary customers include the major semi foundries like TSMC ((TSM - Free Report) ), Samsung, and Intel ((INTC - Free Report) ).
For reference, the width of human hair is approximately 50,000 to 100,000 nanometers (nm) and the coronavirus is about 50 nanometers. Etching transistor channel width at under 10nm requires precision laser instruments.
Headquartered in Veldhoven, Netherlands, ASML provides both EUV and deep ultraviolet (DUV) photolithography machines that enable continued adherence to Moore’s Law by etching nanoscale transistor patterns onto silicon wafers with extreme precision.
In this report, we'll go over the technology, the financial outlook, and the market TAM.
Technologically, ASML’s advantage lies in its EUV platform using 13.5nm wavelength light produced by tin plasma lasers, supported by precision optics from Zeiss. Its new High-NA EUV systems, with 0.55 numerical aperture, offer up to 70% finer resolution, enabling next-generation chips for AI and quantum computing applications. These machines can cost over €350 million each, representing the pinnacle of semiconductor equipment engineering.
ASML’s lithography platforms -- EUV (Extreme Ultraviolet) and DUV (Deep Ultraviolet) -- represent two distinct generations of semiconductor manufacturing technology, each critical to different process nodes and chip applications.
Wavelength and Resolution: EUV systems use light at 13.5 nanometers, enabling far finer patterning and transistor density for nodes at 7nm, 5nm, and below. DUV machines operate at 193 nm or 248 nm, appropriate for nodes > 10nm but less suited to extreme miniaturization.
Optical Architecture: EUV relies on reflective optics because 13.5 nm light is absorbed by air and glass, requiring vacuum chambers and multilayer mirrors to project circuit patterns. DUV uses refractive lenses in standard cleanroom environment, making it less complex and faster in throughput.
Light Source and Cost: EUV generates its light via laser-produced plasma (LPP)—firing lasers at molten tin droplets to produce high-energy EUV photons. This results in higher complexity, lower throughput, and per-system costs often surpassing €350 million. DUV tools rely on excimer lasers, providing greater maturity, reliability, and lower cost per wafer.
Applications and Roles: EUV prints the most intricate chip layers for advanced logic and memory (critical for AI and HPC), while DUV still handles less critical or less dense layers, even on modern chips. DUV remains widely used in legacy nodes and mature fabs, including many in China that lack EUV access due to export controls.
In essence, DUV remains indispensable for high-volume, lower-cost manufacturing, whereas EUV is the cornerstone of next-generation semiconductor scaling enabling today’s high-performance computing revolution.
Why ASML is a Zacks #1 Rank Again
ASML reported its Q3 results on October 15 and in the week since, EPS estimates for this year and next popped nicely. The full year 2025 Zacks Consensus rose from $28.15 to $29.08 and next year's profit projection climbed from $29.15 to $30.14.
The company expects full-year revenue growth of about 15% with consistent profitability near 52% gross margin, driven by surging EUV demand in logic and DRAM segments, especially for sub-3nm nodes.
The Semi Market in an AI Boom
ASML’s total addressable market (TAM) exceeds $1 trillion by 2030, reflecting semiconductor expansion into AI, automotive, and high-performance computing. Within this, lithography tools account for €40-60 billion of direct annual equipment demand potential as fabs across the U.S., Asia, and Europe ramp high-volume advanced-node capacity.
Its de facto monopoly in EUV technology and deep customer integration with TSMC, Samsung, and Intel position ASML as one of the most strategically vital and defensible semiconductor capital equipment investments globally.
ASML’s TAM is shaped by its role as the sole supplier of advanced lithography systems essential to semiconductor scaling. By 2030, the company expects the semiconductor industry to surpass US$1 trillion in total sales, with lithography capturing a key share of this value chain.
Total TAM Overview: ASML targets €44-60 billion in annual revenue by 2030, implying around 4-6% share of global semiconductor spending, supported by gross margins of 56–60%. Industry forecasts place the global lithography equipment market near US$43.7 billion by 2030, up from US$27.8 billion in 2025, reflecting a 6-8% CAGR.
End-Market Exposure: AI-related datacenter, HPC, and networking chips are projected to contribute ~40% of semiconductor demand by 2030, driving the bulk of EUV system sales. Mainstream markets like smartphones, PCs, and automotive will continue moderate growth but represent a smaller share of ASML’s mix.
This week, Bank of America updated its forecast for global semiconductor sales, with the headline that they expect the industry to reach nearly $1 trillion by 2027, over 15% above earlier projections for $860 billion.
While the bank's favorite chip-making names are still NVIDIA ((NVDA - Free Report) ), AMD ((AMD - Free Report) ), and Broadcom, BofA also raised its forecast for chip equipment investment to $118 billion in 2025 and up to $138 billion by 2027. They see complexity in manufacturing as driving long-term capital intensity higher.
This means that Lam Research ((LRCX - Free Report) ), and KLA Corp, and ASML are all seen as key beneficiaries of surging AI and data center spending. The BofA semi analyst team said the AI buildout looks “structurally more durable” than past tech cycles.
In summary, ASML’s addressable market expands across EUV, DUV, and software ecosystems, all underpinned by global re-industrialization and AI-accelerated transistor scaling. This positions ASML to remain the linchpin enabling next-generation semiconductor performance through 2030.