VELDHOVEN — ASML shares touched €1,689 during trading on Tuesday, a 52-week high, before closing slightly lower as the global technology selloff dragged on the sector. The intraday record came hours after the company confirmed that orders for its extreme ultraviolet lithography machines are booked through 2027 and that it has signed another major deal worth $8 billion.
The juxtaposition captured the strange position of the Dutch company in the current market. ASML is the only maker of the EUV machines that produce the most advanced chips, a monopoly that gives it years of visibility into the semiconductor industry’s spending plans. While chip stocks around the world fell on Tuesday, ASML’s backlog said something different: the factories that make AI chips are being built and equipped on schedules that run years into the future.
The $8 billion order is the latest in a series of large commitments from the company’s customers, which include TSMC, Samsung and Intel. The size of the order and the customer were not disclosed, but analysts said the timing points to a foundry operator locking in capacity for AI chip production. Each EUV machine costs more than $200 million, and a single order of that scale represents years of production at the company’s clean rooms in the Netherlands.
Wall Street has taken notice. Wells Fargo has increased its position in the stock, and JPMorgan has raised its price target, according to research notes published this week. The moves reflect a view that ASML’s earnings are insulated from the quarterly swings that have rattled other chip stocks, because its revenue is governed by machines ordered years ago and delivered on schedules that are difficult to change.
The backlog is the cleanest evidence that the AI buildout is not slowing, analysts said. ASML’s machines are the bottleneck of the entire industry: no advanced chip can be made without them, and the company produces only a few dozen EUV units a year. Every machine sold to a chip maker represents a commitment to produce more advanced processors, and an order book that extends to 2027 implies that customers expect AI demand to remain strong at least that long.
The company’s position has made it a weather vane for the semiconductor cycle. In 2023, when the industry was mired in a downturn, ASML’s order book shrank and its shares fell sharply. The recovery since then has been driven by AI, with the company’s high-NA EUV machines, the next generation of its technology, attracting orders even before they entered volume production. The fact that customers are buying the more expensive next-generation machines suggests they are planning capacity for the late 2020s, not just the current cycle.
The risks to the story are the same ones hanging over the entire AI trade. If the hyperscale operators that drive AI spending cut their capital budgets, chip makers would postpone fab construction and cancel EUV orders, and ASML’s backlog would shrink with a lag of a year or more. The company’s management has acknowledged that risk in earnings calls, while noting that the length of its order book has never been greater.
Geopolitics adds another layer. ASML has been barred from selling its most advanced machines to China, a market that once accounted for a large share of its revenue, and the export controls have forced the company to rely even more heavily on a handful of Western customers. That concentration is a double-edged sword: it makes the backlog more visible, but it also means the loss of a single large customer would be felt immediately.
Tuesday’s session offered a preview of how investors will treat the company in a volatile market. The stock touched its 52-week high before the selloff caught up with it, and it closed with a modest decline that was far smaller than the double-digit drops in memory and accelerator stocks. Traders said the pattern reflected ASML’s status as a defensive way to own the AI buildout: less exciting than Nvidia, but with an order book that provides a floor under expectations.
The company’s financial profile reflects its position. ASML spends heavily on research and development, reinvesting a share of revenue that is among the highest in the industry, and the next generation of its technology, called high-NA EUV, has been under development for years. The machines push the limits of optics and precision manufacturing, and each generation is harder to build than the last. The company’s monopoly has allowed it to fund that research without the margin pressure that competitors face, and its order book lets it commit to multi-year development programs smaller companies could not afford.
The China question remains the largest uncertainty in the company’s outlook. Export controls have barred ASML from selling its most advanced machines to Chinese customers, and sales to China, once a major share of revenue, have been limited to older products that fall outside the restrictions. The company has said the controls cost it revenue but that Western demand has more than made up the difference. The longer-term risk is that China’s domestic efforts to build lithography capability eventually reduce the country’s dependence on ASML, a scenario the company cannot control. For now, the order book runs through 2027, and the machines that will produce the world’s most advanced chips for the rest of the decade are spoken for.
For the industry, the message of the backlog is the same one TSMC delivered on the same day: the capacity expansion continues. The machines are ordered, the fabs are under construction, and the companies building them have committed to a future in which AI chips are produced at a scale that has never existed. Whether the end market justifies that commitment is the question that will occupy investors for the rest of the year; for now, the equipment maker’s calendar is full.
