1 Outstanding Growth Stock to Buy and Hold Over the Next Decade
Amid the ongoing artificial intelligence (AI) revolution, this Dutch lithography equipment maker is emerging as a critical behind-the-scenes player in the global semiconductor industry. ASML Holdings (ASML) doesn’t manufacture chips. But it designs and manufactures photolithography machines, which chipmakers use to create advanced semiconductor chips.
Valued at $346.8 billion, ASML stock has gained 52% year-to-date (YTD), outperforming the broader market gain. As demand for AI, data centers, and high-performance computing accelerates, this Dutch tech giant looks poised to deliver strong growth for years to come.
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The company’s advanced lithography systems help chipmakers build computer chips used in AI, smartphones, data centers, and autonomous vehicles. Being a critical supplier to chipmakers has significantly boosted its financial performance over the past few years.
In the third quarter of 2025, total sales reached 7.5 billion euros, in line with the year-ago quarter but down from 7.7 billion euros in the second quarter. Notably, logic drove 65% of system sales, while memory customers accounted for 35%, a balance that highlights the firm’s diversified exposure across semiconductor segments. Net income of 2.1 billion euros translated into 5.49 euros in earnings per share, showing sustained profitability despite minor sequential fluctuations. EPS also increased by 4% from the prior year’s quarter. Gross margin came in at 51.6%, up from 50.8% in the same quarter last year.
Notably, net bookings exceeded 5.4 billion euros, with extreme ultraviolet (EUV) systems accounting for 3.6 billion euros, indicating that industry demand for ASML’s most advanced technologies remains strong. Installed Base Management sales, a recurring source of high-margin service revenue, totaled 1.96 billion euros. Despite the minor sequential reduction in revenue, management stated that the results were fully in line with seasonal forecasts. ASML’s durable moat is built on a continuous commitment to innovation. EUV sales are strong, and the company has already reported the shipping of its first High-NA (high numerical aperture) EUV system, which promises higher resolution for advanced chip nodes. This was a significant milestone in next-generation semiconductor production. Furthermore, ASML is growing its presence in semiconductor packaging and integration. The company announced the shipment of its first TWINSCAN XT:260 scanner, which is intended for advanced packaging and 3D integration applications.
A key highlight in the third quarter was ASML’s strategic partnership with Mistral AI, an emerging leader in AI model development. ASML made a direct investment of around 11% in Mistral and secured a seat on its strategic committee. This collaboration will integrate AI into ASML’s “holistic portfolio,” enhancing system performance, yield, and development speed. Management noted that while many people associate ASML with hardware, with the support of Mistral, the firm will now evolve its software side, which is important to the precision and speed of its systems.
ASML continues to reward shareholders with a focused capital return strategy. In the quarter, the company issued an interim dividend and repurchased 5.9 billion euros of shares as part of its 12 billion euro share buyback program. While ASML does not expect to complete the current buyback in full by the end of 2025, management intends to launch a new repurchase program in early 2026, demonstrating its continuous commitment to shareholder value creation.
ASML expects to finish the year strong with Q4 sales between 9.2 billion euros and 9.8 billion euros, representing a sharp sequential increase consistent with its historical pattern of strong year-end shipments. It would also imply around a 3% year-over-year (YoY) increase at the midpoint. For the full year, ASML anticipates approximately 32.5 billion euros in total net sales, up about 15% from 2024, and a gross margin of around 52%. Analysts predict revenue increasing by 28% in 2025, followed by a 42.9% increase in earnings.
Looking ahead to 2026, ASML acknowledged that demand from China will fall dramatically in 2026, following two exceptionally strong years. However, the company forecasts total global sales to stay at least flat YoY, owing to increased EUV usage and an increase in AI-driven semiconductor spending.
Furthermore, management reiterated ASML’s 2030 financial targets, projecting revenue between 44 billion and 60 billion euros, with gross margins ranging from 56% to 60%. The rise of AI, cloud computing, and high-performance computing, all of which require more advanced lithography layers, as well as the shift to 3D integration, are expected to fuel this growth.
Turning to valuation, ASML stock is priced at 34 times forward earnings, lower than its five-year historical average of 38.2x.
AI-related demand continues to drive investment in advanced logic and DRAM manufacturing, both of which are significantly reliant on ASML’s systems. ASML stands out because of its strong alliances with leading chipmakers such as Intel (INTC), Samsung (SMSN.L.EB), and TSMC (TSM); rapid revenue growth; strong cash generation capabilities; and a technological edge in its field. For investors seeking a high-quality growth stock, ASML is the one to hold over the next decade.
On Wall Street, analysts have given ASML stock a consensus “Strong Buy” rating. Of the 26 analysts who cover the stock, 19 rate it a “Strong Buy,” one says it is a “Moderate Buy,” and six rate it as a “Hold.”
The stock has surpassed its average target price of $995.75. But its high target price of $1,150 implies a potential 9% gain over the next 12 months.
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On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
