Will ASML Be a Trillion-Dollar Stock by 2030?
ASML (NASDAQ: ASML) was one of the hottest tech stocks of 2021. The Dutch semiconductor equipment maker's shares skyrocketed nearly 70% over the past 12 months as the global chip shortage highlighted the indispensable nature of its lithography systems, which etch circuit patterns onto silicon wafers. ASML is the world's largest supplier of lithography systems, and it's the only manufacturer of high-end extreme ultraviolet (EUV) systems, which are used to produce the market's smallest and most advanced chips.
Semiconductor foundries like TSMC (NYSE: TSM), Samsung, and Intel (NASDAQ: INTC) need a constant supply of ASML's EUV machines, which cost about $150 million each and require multiple planes to ship, to address the market's insatiable appetite for new chips. ASML doesn't face any competitors in the EUV market for two simple reasons: It's spent more than three decades developing the technology, and it's prohibitively expensive for smaller lithography companies to enter this capital-intensive market.
ASML's market dominance enables it to generate stable revenue growth with expanding gross margins. It also plans to maintain its dominance with new high-NA EUV systems, which will enable the world's top foundries to manufacture even smaller chips over the next few years. Could that resilient business model turn ASML into a trillion-dollar company by 2030?
Source Fool.com
