Key Points

Elon Musk recently highlighted ASML Holdings as arguably Europe's finest enterprise.
ASML produces photolithography equipment essential for creating advanced semiconductors.
The firm has expanded rapidly in recent years while delivering strong profit margins.
10 stocks we like better than ASML

North America hosts numerous top global firms, including SpaceX and Tesla, both led by Elon Musk. Yet Europe also features robust technology businesses that offer attractive investment opportunities and help U.S. investors spread risk beyond home markets.

One standout has caught Musk's eye as the continent's best, namely ASML Holding (NASDAQ: ASML). Below we examine the factors behind its strength and assess its potential as an investment now.

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Chipmakers depend on ASML equipment

ASML holds a key position in technology by supplying machines that pattern circuits onto semiconductors. It maintains near-total control over extreme ultraviolet systems required for cutting-edge chips. Musk views these tools as essential for Terafab and his plan for a large-scale semiconductor plant.

Its commanding role has lifted ASML to one of the highest-valued firms beyond North America, reaching a market capitalization near 730 billion dollars. Revenue last year reached 33 billion euros, climbing 54 percent across the prior three years. The company also posts solid operating margins near 30 percent.

Given its role in Terafab and impressive performance, Musk recently praised the business on social media, stating that ASML should be valued and backed as arguably the greatest company in Europe.

ASML offers strong long-term potential

ASML shares have climbed 77 percent this year and 170 percent over five years. The chief concern for buyers today is valuation, with the stock priced above 60 times trailing earnings after its swift gains. Still, ongoing heavy spending on artificial intelligence and the need for ASML tools in next-generation chips point to sustained expansion. Rising revenue should lift earnings and ease the multiple over time.

In the end, ASML's broad competitive edge supports its appeal for patient investors. Rival threats remain limited, and continued technology investment in advanced chips will sustain its growth. Its solid financial profile and durable business position make it a compelling choice for long-term holders.

Should you buy stock in ASML right now?

Before you buy stock in ASML, consider this:

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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML and Tesla. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.