Why ASML Matters More to AI Than Nvidia

ASML is often overlooked as the linchpin of the AI market, but it's actually more crucial than Nvidia. The company produces lithography systems that are used to create the world's smallest and densest chips.

These systems, known as EUV (Extreme Ultraviolet) lithography systems, cost between $200 million to $400 million each and are shipped in pieces with multiple planes. All of the top foundries, including TSMC, Samsung, and Intel, use ASML's EUV systems to produce their most advanced chips.

ASML is also a leading producer of DUV (Deep Ultraviolet) systems, which are used to create older and larger chips. These systems cost between $10 million to $90 million each and are roughly the size of a small van.

The company's monopolistic position in the EUV market gives it significant pricing power and room to grow as the semiconductor market expands. Analysts expect ASML's revenue and EPS to grow at CAGRs of 26% and 39%, respectively, from 2025 to 2028.