ASML

ASML's Q3 2026 results show strong demand for semiconductor equipment with AI hardware demand expected to outpace supply through at least 2028. The company sold 113 lithography systems, nearly double year-ago sales, and customers are placing orders for 2029-2030. This positive outlook supports continued growth for Nvidia and Micron, which have recently pulled back and now trade at attractive valuations.

The article compares ASML and Dell Technologies as AI infrastructure plays. ASML dominates chip equipment manufacturing with a monopoly on extreme ultraviolet lithography and strong 54% gross margins, trading at a premium valuation (P/E 40.13).

Dell provides AI-optimized servers and data center solutions at a lower valuation (P/E 26.79) but faces customer concentration risks and lower margins (19.70%). The author favors ASML due to its superior competitive moat, pricing power, and profitability despite its higher valuation.

ASML, a semiconductor equipment supplier, has underperformed the S&P 500 with a -6.7% return over the past month. Despite strong earnings growth expectations (+101.4% YoY for current quarter) and consistent beats on both EPS and revenue estimates, the stock carries a Zacks Rank #3 (Hold) rating. The company is trading at a premium valuation (Value Style Score: D) relative to peers, suggesting it may perform in line with the broader market in the near term.