The hidden bottleneck in AI: why ASML just raised its 2026 outlook

A decade ago, ASML (ASML) was a relatively small $20 billion company headquartered in the Netherlands’ fifth-largest city.

Today, it’s Europe’s most valuable company worth $600 billion.

ASML is in the business of making the machines that make the most-advanced chips. No ASML, no cutting-edge semiconductors used.

And thanks to AI, business is booming.

Because sooner or later, every AI breakthrough runs into the same problem. You have to build more advanced chips.

And right now, the world can’t build enough of them.

Which brings us back to ASML and why this “picks and shovels” story may be entering its most important phase yet…

ASML is an irreplaceable business.

If Walmart closed tomorrow, you could buy groceries at Costco. If Nike stopped making sneakers, you could wear Adidas.

But if you want to make the world’s most advanced computer chips, you only have one option: machines made by Advanced Semiconductor Materials Lithography (ASML).

Without ASML’s machines, our modern digital world would screech to a halt. No iPhone in your pocket. No Nvidia (NVDA) chips powering ChatGPT. No robotaxis safely ferrying kids to soccer practice in San Francisco.

Are ASML’s best days behind it? Or is this your chance to pick up shares of a world-class innovator on sale?

Chips are the most important goods the world has ever known.

They are the “fuel” powering every modern technology. From the phones in our pockets to the planes in our skies to the credit cards in our wallets. 

Even the most mundane objects now run on chips. Your rice cooker cooks perfect rice because tiny semiconductors precisely control the heat. A pacemaker keeps a heart beating because a chip sends perfectly timed electrical pulses.

And chip sales have only gone one way our entire lives… UP!

In the next decade, the amount of money spent on chips will exceed that spent on oil.

Chips are also the key to enabling robotaxis. Personalized tutors that teach our kids. And every future disruption you can think of.

Almost all the tech progress in our lifetime has come from chipmakers figuring out how to cram more transistors onto microchips.

Look at your thumbnail. The chip in the latest iPhone is smaller. Yet it packs tens of billions of transistors built on a cutting-edge 3-nanometer process.

This is made possible by ASML’s super powerful chipmaking machine that uses extreme ultraviolet light (EUV).

The EUV machine is so complex. No other company on Earth can replicate it. ASML has a 100% total monopoly on it.

Imagine taking a pencil and trying to write thousands of letters on a grain of rice. Each one perfectly formed and precisely placed.

That’s essentially what ASML’s EUV machines do. Except instead of rice, they’re working with silicon wafers. Instead of letters, they’re printing billions of microscopic transistors.

Each EUV machine is as heavy as a jumbo jet, packed with 100,000 precision parts and 2 kilometers of cables all working in perfect harmony. It towers over the engineers who run it like some kind of futuristic deity:

Moving just one of these hulking machines requires a logistics operation worthy of a military campaign. Forty shipping containers, three cargo planes, and a fleet of 20 trucks. Price tag: $300 million, more expensive than a large passenger aircraft.

Inside each EUV machine, something almost magical happens. Fifty thousand times per second, tiny droplets of molten tin are fired through a vacuum chamber. Each droplet is hit twice by powerful lasers. The first one flattens it into a pancake shape, while the second superheats it into plasma that’s 40 times hotter than the surface of the sun.

This creates extreme ultraviolet light, which then bounces off a system of mirrors so perfectly smooth that if you scaled one up to the size of California, its biggest imperfection would be smaller than a grain of sand.

ASML’s EUV machine is the key to making the latest, fastest chips.

Technological supremacy is great for business. ASML’s sales have almost quadrupled since it started shipping EUV systems in 2017.

Until now, it’s been all about making AI and “logic” processors faster.

Now the bottleneck is shifting. AI systems are becoming memory-hungry machines, and chipmakers are racing to scale high-bandwidth memory (HBM) just to keep up with exploding data demands.

To do that, they need ASML’s machines. Expect top memory makers SK Hynix, Samsung, and Idaho’s Micron Technology (MU) to to keep filling ASMLs coffers.

ASML is a great business sitting at the center of a disruptive megatrend. It should keep thriving for years.