FORGET TULIPS, THIS IS WHAT THE NETHERLANDS REALLY GROWS BEST

(ASML), (TSLA), (NFLX)

You know that feeling when your daughter tells you something is “absolutely sending me” and you have no clue what’s being sent where? 

That’s exactly how I felt last week when my neighbor asked me why ASML stock was “acting weird.” 

Apparently, the market’s confusion over this Dutch company was absolutely sending him too – though in his case, it was sending him straight to my driveway for answers. 

Here’s a company that basically has a monopoly on the machines that make the chips that power everything from your iPhone to those Tesla (TSLA) autopilot systems that still can’t figure out construction zones, and somehow Wall Street is treating it like yesterday’s leftover turkey.

Let me give you a summary of what they do. 

ASML makes these massive machines – think shipping container meets rocket science – that literally draw circuits on silicon wafers using extreme ultraviolet light. If that sounds complicated, it’s because it is. 

We’re talking about a decade-long research project that required more engineering precision than landing on the moon, and honestly, probably cost about as much. 

And how did that work out for them? Well, let’s just say they went from “expensive science experiment” to “congratulations, you now own the only keys to the world’s most advanced chip-making kingdom.”

Now, I’ll admit something embarrassing here. 

When I first heard about “lithography” in the semiconductor world, I thought it had something to do with printing fancy art posters. Shows you how much I knew about chip manufacturing back then. 

Turns out, it’s more like using the world’s most expensive microscopic Etch A Sketch to create patterns smaller than a virus. Who knew?

The stock has been flatter than a pancake this year while the S&P 500 partied like it was 1999. Why? Because ASML’s management had the audacity to suggest they couldn’t predict 2026 with crystal ball precision, given all the trade war drama swirling around. 

Supposedly, when you’re building multibillion-dollar semiconductor factories, you like to know whether tariffs are going to make your end products cost more than a luxury car. Crazy concept, right?

But this is what I find even more interesting. Remember when everyone was worried about Netflix (NFLX) because people might cancel subscriptions during tough times? This is different. 

The demand for high-end chips isn’t going anywhere. We’re talking about artificial intelligence, autonomous vehicles, data centers that power our increasingly digital lives, and automation that’s making everything from agriculture to warfare more tech-dependent. ASML estimates the semiconductor market will hit a trillion dollars by 2030. 

The competitive landscape is even more fascinating. 

To challenge ASML, you’d need to build something dramatically better than their current machines, not just “as good as.” 

When your customers have already invested billions in your equipment ecosystem, they’re not switching unless the alternative is significantly superior. It’s like trying to convince someone to replace their entire kitchen because you invented a slightly better can opener.

Sure, China might be working on their own extreme ultraviolet technology, but considering it took ASML and several international partners about a decade to perfect this, Beijing probably isn’t close to rolling out competitive alternatives anytime soon. 

Even if they were, the installed base advantage is enormous. 

ASML isn’t just selling machines; they’re providing ongoing service, upgrades, and optimization for each customer’s specific manufacturing needs.

The company is already working on their next generation of tools – high numerical aperture EUV systems that can create even finer patterns with better efficiency. 

The company is already working on their next generation of tools – high numerical aperture EUV systems that can create even finer patterns with better efficiency. The economics aren’t quite there yet for mass adoption, which means ASML is essentially competing against themselves. 

Their biggest threat is customers deciding to squeeze more life out of current equipment rather than upgrading immediately. 

But here’s the thing about Moore’s Law – it’s like trying to stuff more people into an elevator that’s already at capacity. 

Eventually, the laws of physics tap you on the shoulder and say “sorry buddy, that’s all she wrote.” When chip makers hit that wall, they can’t just wish their way to smaller transistors – they need ASML’s fancier machines to break through to the next level.

Another aspect that caught my attention is the valuation. ASML trades at about 25 times forward earnings while maintaining gross margins above 50%. 

Compare that to other semiconductor equipment companies or chip designers, and they’re actually trading near recent lows despite having arguably the strongest competitive position in the entire ecosystem. 

When a monopoly with growing margins trades cheaply because of short-term uncertainty, that’s usually when smart money starts paying attention.

The risks are very real, too. Semiconductor demand is cyclical, trade restrictions create planning headaches, and the adoption of new technology can take longer than expected. 

But the underlying thesis remains rock solid: as long as we need faster, more efficient chips to power our increasingly digital world, someone needs to make the machines that create those chips. 

And right now, that someone is pretty much just ASML. That’s why I’m adding shares on this weakness. 

Just don’t ask me to explain lithography at your next family gathering – I’m still working on that elevator pitch. 

Though I suppose if I master it, my daughter might say it’s absolutely sending me. Or maybe that’s not how you use that phrase. 

Either way, I’ll stick to what I know best: finding undervalued companies that make the world spin.