10 Unrivaled Stocks of the Next 10 Years

6) ASML Holding N.V. (NASDAQ:ASML)

Number of hedge fund holders: 81

ASML Holding N.V. (NASDAQ:ASML) is the leader in photolithography systems, which are used in the manufacturing of semiconductors. Photolithography refers to the process in which a light source is used to expose circuit patterns from the photomask onto a semiconductor wafer.

ASML Holding N.V. (NASDAQ:ASML) enjoys a significant moat in the lithography market. Its systems are the most advanced in the world, because of which its would-be competitors would require a significant amount of expertise to operate. The company also has a long-term monopoly on EUV lithography systems. EUV refers to the most advanced lithography technology, which finds its usage in the manufacturing of the smallest and most complex chips.

The company’s leading competitive advantages include intangible assets, cost advantages, and switching costs. Over the next decade or so, ASML Holding N.V. (NASDAQ:ASML) should remain the top lithography provider for semiconductor foundries, or fabs. This is because of its technological leadership and large R&D budget, which acts as a big entry barrier. Also, there are high switching costs for semiconductor foundries whose plants are designed from ASML Holding N.V. (NASDAQ:ASML)’s lithography machines.

ASML Holding N.V. (NASDAQ:ASML) is dominant in its lithography market, having an ~82.9% market share. Experts have tagged this company as a “kingpin” or “key enabler of several important sectors”, which includes mobile communications, data centers, and artificial intelligence (AI).

Susquehanna increased its price target on shares of ASML Holding N.V. (NASDAQ:ASML) from $1,200.00 to $1,300.00, giving it a “Positive” rating on 11^th July. As per Insider Monkey’s 2Q 2024 database, ASML Holding N.V. (NASDAQ:ASML) was in the portfolios of 81 hedge funds.

Polen Capital, an investment management company, released its fourth-quarter 2023 investor letter and mentioned ASML Holding N.V. (NASDAQ:ASML). Here is what the fund said:

“Netherlands-based ASML Holding N.V. (NASDAQ:ASML) and Japan-based Lasertec play dominant roles within different segments of the global semiconductor industry. In both cases, shares rallied significantly in the fourth quarter of 2023, prompting our positions to grow as a percentage of the overall portfolio. We believe both companies will see demand for their products as extreme ultraviolet (EUV) lithography and soon high-numerical aperture lithography must be utilized to manufacture the world’s smallest chips. However, in our estimation, 2024 could deliver a year of less exciting growth for the semiconductor industry, which prompted us to trim these positions back.”