Rodrigo Lopez Buenrostro of KUE Capital presented his thesis on ASML (Netherlands: ASML, NYSE: ASML) at Wide-Moat Investing Summit 2025.
Thesis Summary
ASML, the dominant supplier in the semiconductor lithography equipment industry, recently traded at €680 per share, reflecting a market capitalization of approximately €270 billion and an enterprise value of €260 billion. ASML has a monopoly on EUV (Extreme Ultraviolet) lithography machines, a critical technology required for manufacturing advanced semiconductor chips. The company’s market position is reinforced by high entry barriers and proprietary technologies, effectively insulating it from competitive threats.
The core investment thesis revolves around the structural growth of global semiconductor demand, propelled by advancements in computing, data centers, AI technologies, and an expanding global internet infrastructure. ASML’s lithography machines are central to enabling ongoing progress in chip miniaturization, directly underpinning Moore’s Law. The company’s unique technological leadership, particularly in EUV and DUV machines, positions it strategically to capture disproportionate economic benefits as the industry continues its upward trajectory.
ASML’s strong competitive moat is amplified through its installed base management, leveraging a high-margin service and upgrade business driven by continuous innovation and customer lock-in. Additionally, ASML strategically reinvests about 100% of its net income into its business, maintaining a robust R\&D pipeline aimed at further technological advances, such as the development of Hyper-NA machines, which solidify its competitive edge and growth trajectory.
Despite its robust competitive positioning and substantial reinvestment in growth, ASML faces risks including the potential slowing of Moore’s Law, the concentrated customer base for high-NA technology, possible technological disruptions, and geopolitical tensions affecting supply chains and trade dynamics. However, the company’s prudent risk management and strategic patience in the face of uncertainties provide a strong buffer. With high returns on new investments (approximately 20% RONE) and a compelling valuation, ASML represents a high-quality investment, though investors may prefer to wait for a more favorable entry price closer to €600 per share.
Disclaimer
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Slides
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