Is ASML Holding (ASML) One of the Best Technology Stocks to Buy for Long-Term Investment?
We recently published a list of the 13 Best Technology Stocks to Buy for Long-Term Investment. In this article, we are going to take a look at where ASML Holding N.V. (NASDAQ:ASML) stands against other tech stocks to buy for long-term investment.
On May 12, Jeff Kilburg of KKM Financial and Dan Ives of Wedbush Securities appeared together on CNBC to discuss AI, cybersecurity, and mega-cap tech, especially as tech stocks soar as the US-China tariff deal boosts market confidence. Jeff Kilburg first identified the tech software sector as the primary beneficiary of the recent market pause amid optimism and gains, and highlighted that markets are broadly positive. He noted that many investors underestimated how quickly a China trade deal would materialize and contrasted it with the UK deal, which was expected to be a slower, tentative template. Kilburg suggests that faster deal-making could continue and benefit several software companies, which have been overlooked due to the focus on the MAG7. Dan Ives concurred with Kilburg's view but singled out NVIDIA as the biggest near-to-medium-term beneficiary of the pause, especially given its prior exposure to China tariffs. He referenced the ongoing AI revolution and the surge in AI-related stocks and described the current environment as a dream scenario for tech investors. Ives anticipates new highs for tech and the broader market. He also described a 'golden age' for cybersecurity stocks, which are acting as secondary beneficiaries of AI growth.
On a question about the impact of the admin's focus on reducing federal spending and debt, particularly on companies that derive substantial revenue from government contracts, Kilburg responded that this fiscal discipline is actually positive for software companies as it may drive more spending toward efficient software solutions. Kilburg also addressed the sectors to avoid or be cautious about amid the current market environment. He suggests trimming utilities, which have been a safe haven but may now be less attractive. He points out that the VIX volatility index dropping below 20, which is a big change from over 60 in April, indicates reduced market fear and increased investor confidence. This suggests a market environment favoring higher-beta and growth-oriented investments rather than defensive plays.
We first sifted through stock screeners, ETFs, and financial media reports to compile a list of the top tech stocks that have grown over 15% in the past 3 years. We then selected the 13 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A technician in a clean room working on a semiconductor device, illuminated by the machines.
3-Year Revenue CAGR: 19.98%
Number of Hedge Fund Holders: 86
ASML Holding N.V. (NASDAQ:ASML) provides lithography solutions to develop, produce, market, sell, upgrade, and service advanced semiconductor equipment systems. It offers lithography, metrology, and inspection systems. It also offers hardware, software, and services to chipmakers to produce the patterns of ICs.
ASML's EUV/Extreme Ultraviolet system sales contributed EUR3.2 billion to the total net system sales of EUR5.7 billion in Q1 2025. This segment benefited from a favorable product mix with a higher proportion of NXE:3800E systems. Higher average selling prices and the achievement of customer productivity milestones on already installed EUV systems also drove the company's growth. These factors together pushed the gross margin above guidance to 54%.
ASML Holding (NASDAQ:ASML) is continuing the ramp-up of leading-edge logic nodes by customers utilizing the NXE:3800E system. Furthermore, the progress in High NA EUV technology, with the shipment of the fifth NXE:5000 system and the upcoming shipments of the NXE:5200, indicates a longer-term growth trajectory for the company. However, Morgan Stanley analyst Lee Simpson lowered the price target on ASML to EUR640 from EUR 680 while keeping an Equal Weight rating.
Baron Fifth Avenue Growth Fund is optimistic about ASML Holding (NASDAQ:ASML) due to its monopoly in critical lithography and stated the following in its Q4 2024 investor letter:
'ASML Holding N.V. (NASDAQ:ASML) is a Dutch company that designs and manufactures photolithography equipment for semiconductor manufacturing. While ASML is the leader across all types of lithography, most importantly, it is the only manufacturer of extreme ultra-violet lithography tools, which are critical for the manufacturing of leading-edge chips. Shares fell 16.6% during the fourth quarter (finishing the year down 7.7%) on reduced guidance for 2025 as well as growing investor concerns about the potential impact of U.S. government restrictions on Chinese demand and the possibility of peaking lithography intensity. Despite near-term noise, we believe that the growing demand for chips in general and AI chips in particular will continue to support long-term growth for the wafer fab equipment industry with ASML's competitive positioning remaining unassailable. While lithography as a percentage of capital expenditure may decrease from current levels, the chip layer count requiring lithography will continue to increase, in our view, as chips continue to become more complex. As a monopoly on critical lithography tools supporting an industry with growing demand fueled by the proliferation of AI, we see strong long-term upside for ASML.'
Overall, ASML ranks 7th on our list of the best technology stocks to buy for long-term investment. While we acknowledge the growth potential of ASML, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than ASML but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
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