The One Tech Company Selling Picks and Shovels to the AI Gold Rush

Key Points

• ASML provides critical equipment for making advanced microchips.

• But tariffs and politics have muddied the company's outlook.

• ASML could still be worth an investment despite these risk factors.

• These 10 stocks could mint the next wave of millionaires ›

There is a frenzy about artificial intelligence (AI) in the stock market today -- but it's not the first time excitement like this has happened.

Throughout history, investors have become euphoric over perceived once-in-a-lifetime opportunities, dating back at least to the famous California Gold Rush of the mid-1800s. Ironically, those who struck it rich usually weren't the hopeful gold prospectors, but the companies selling them the picks and shovels they needed to turn their dreams into reality.

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Today, individuals and corporations are rushing to invest in AI, fearing they may miss the next big thing. In the process, one technology company has fallen by the wayside -- and yet, AI probably doesn't happen without ASML Holding (NASDAQ: ASML). Here is why, and what makes the stock a potential table-pounding buy right now.

Image source: The Motley Fool.

ASML's crucial role in keeping AI on the cutting edge of innovation

Technology revolves around microchips, pieces of silicon packed with tons of transistors -- tiny semiconductor devices that manipulate electrical signals. You could think of transistors as the cells that make up organic tissue.

Making technology more powerful and efficient requires packing microchips with an increasing number of transistors. For example, Nvidia's Blackwell GPU AI chip contains 208 billion of them! That's up from the 80 billion transistors in its predecessor, the H100.

However, it's not easy fitting billions of transistors onto a piece of silicon you can hold in your hand. It requires a specialized process, known as extreme ultraviolet (EUV) light lithography. ASML is the world's only company that builds these EUV machines, making it a critical player in artificial intelligence and other emerging high-tech applications, such as autonomous vehicles and humanoid robotics.

Looking into why the stock is down

Despite the excitement surrounding AI and its potential, ASML's stock has lagged. Shares have slumped by over 15% in the past 12 months, while the tech-heavy Nasdaq Composite has surged by over 20%.

Unfortunately, the Dutch company has faced some turbulence related to global economic tensions. Tariffs have increased the costs of equipment, components, and supplies imported into the United States. Furthermore, the U.S. government has reportedly continued to pressure the Dutch government to limit ASML's business with China.

The company's management noted on ASML's Q2 2025 earnings call that the disruptions were causing some customers to hesitate, potentially slowing or delaying equipment purchases, which resulted in ASML issuing a cautious growth outlook for 2026.

ASML also sells to a small customer base. Since there are only a handful of prominent companies that manufacture chips, just three customers account for the majority of ASML's sales. One of those, Intel, has struggled. It's naturally riskier to have most of your eggs in just a few baskets, which has potentially weighed on investor sentiment as well.

Why ASML could be an excellent buy right now

Given the risks, it's understandable that the stock has performed as it has. That said, investors have the opportunity to step back and assess the broader picture here.

Although tariffs and other issues may cloud ASML's short-term outlook, the long-term trend is clear: AI and other applications will demand more advanced chips. ASML's position as the dominant provider of lithography and EUV lithography systems will likely drive long-term growth.

Additionally, ASML's dominance helps mitigate customer concentration risks, as chip foundries are heavily dependent on these machines and cannot easily purchase them elsewhere. That could be why analysts still anticipate ASML growing earnings by an average of over 17% annually over the next three to five years.

The stock has slumped to a price-to-earnings (P/E) ratio of 26. That's in line with its lowest P/E ratio over the past few years, and its lowest since 2019. In other words, ASML doesn't fall to these levels very often, especially given the market's focus on AI opportunities.

If there were no question marks, ASML probably wouldn't be this cheap. However, ASML should continue selling its ultra-important EUV systems for as long as the AI gold rush persists. Investors may well look back in hindsight and wish they had scooped up shares on the cheap.

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Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Intel, and Nvidia. The Motley Fool recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.