An Uncopyable Business. These 4 Stocks Are Crushing the Market Thanks to Their Competitive Advantage
A competitive advantage that cannot be bought or quickly built is one of a company’s most valuable attributes. It shows up in pricing power, high margins, and stable cash generation even in tougher years. But even the strongest moat does not guarantee a good stock return if investors pay too much upfront for the quality of the business.
Key points
An economic moat is not a high margin, but a structural reason why competitors cannot siphon it away. You can recognize one by returns on capital that remain high even in years when the company is struggling.
The most durable advantages are built on mechanisms that take years or decades to establish: a technological lead, a network effect, trust backed by regulation, and the scale of physical infrastructure.
A resilient moat does not mean stable revenue. Even a company with no real competitor remains exposed to the economic cycle, geopolitics, and regulation.
Pricing power is best recognized when revenue grows faster than the volume of services provided, without customers leaving.
The price determines whether a stock is attractive. A simple reverse model shows what growth a company must deliver for today’s valuation to make sense. A high-quality company can stagnate for several years simply because the multiple at which it trades declines.
What an economic moat means
An economic moat is a structural reason why a company earns more than its cost of capital over the long term without competitors siphoning away that excess return. A high margin alone is not a moat. If it can be replicated, it will attract new players and disappear within a few years. You can recognize a genuine moat by returns on capital that remain high even in years when the company is struggling.
A successful product, a favorable point in the cycle, or a shortage of capacity among competitors can provide a temporary advantage. A structural advantage arises from mechanisms that take years or decades to build:
A technological and supply-chain lead that cannot be replicated, even with unlimited capital.
A network effect, where the service becomes more valuable with every additional participant on both sides of the market.
Trust and regulatory entrenchment: a standard referenced in contracts and regulations.
The scale of physical infrastructure, which a new player would have to build location by location.
Are these stocks beating the market? In 2026, only ASML and Visa
Price return from the end of 2025 through October 27, 2026, excluding dividends:
ASML $ASML: from 1 066,12 USD to 1 635,57 USD (Nasdaq), about +53 %.
Visa $V: from 350,71 USD to 401,86 USD, +14,6 %.
S&P Global $SPGI: from approximately 522,6 USD to about 455 USD, around -13 %.
Copart $CPRT: from 39,15 USD to 28,92 USD, -26,1 %.
S&P 500 index: price return of approximately +14,1 % through October 12, 2026 (the latest verified figure).
Only ASML has clearly beaten the market this year; Visa is roughly in line with the index, while the other two stocks are significantly underperforming. S&P Global’s decline was driven by its February 2026 outlook and concerns about the impact of artificial intelligence on data services, while Copart was hit by falling volumes. However, a ten-month period says little about the strength of a moat.
ASML
A monopoly in the most advanced lithography
ASML manufactures lithography scanners that project a circuit design onto a silicon wafer. For the smallest structures, there is currently no alternative to EUV technology (extreme ultraviolet radiation with a wavelength of 13,5 nm), supplied exclusively by ASML. Without it, the most advanced logic chips and HBM memory for artificial intelligence accelerators cannot be manufactured at scale. The next generation, High-NA EUV, uses a larger numerical aperture to print finer structures in a single exposure and is aimed at process nodes around 2 nm and below.
The customer base is narrow: most orders are decided by TSMC $TSM, Samsung $SSNLF, SK hynix $SKHY, Intel $INTC, and Micron $MU.
Why competitors are not catching up
EUV development took approximately three decades and required building an entire supplier ecosystem. Zeiss is the exclusive supplier of the optics, the radiation source is made by subsidiary Cymer, and the system contains tens of thousands of parts from suppliers that are technologically and capacity-wise tied to ASML. A competitor would have to master the plasma source, atomically precise optics, a vacuum environment, and control software all at once. Nikon $NINOF and Canon $CAJPY do not compete in EUV, and China’s efforts to build its own system have not reached mass production.
ASML’s moat is not a single patent, but the combination of know-how, suppliers, and decades of development with customers—something money cannot accelerate.
How the advantage shows up in the numbers
In 2025, ASML generated revenue of 36,5 mld. USD, with a gross margin of 52,8 %, net income of 10,7 mld. USD, and free cash flow of 12,3 mld. USD. Its order book (backlog) stood at 43,3 mld. USD at year-end. According to its third-quarter 2026 results, revenue rose to a record 13,0 mld. USD, gross margin reached 57,5 %, and net income was 5,6 mld. USD. Management expects full-year 2026 revenue of 49 to 50 mld. USD, with gross margin around 56 %.
Operating margin was about 44 % in the third quarter, compared with 34,6 % for 2025. The increase is mainly explained by revenue mix: services and upgrades to the installed base (3,7 mld. USD for the quarter) have above-average profitability, and each machine sold expands the base of recurring revenue. Quarterly profit also includes approximately 0,6 mld. USD from a revaluation of the stake in Mistral AI, so EPS of 14,44 USD overstates operating performance.
Cash also demonstrates negotiating power. According to trade publications, a High-NA system costs more than 390 mil. USD, roughly twice the price of a standard EUV machine, and customers pay substantial deposits. Long-term contractual liabilities, mostly deposits for future machines, approximately tripled in 2026 to 10,4 mld. USD.
Weak spots: the cycle, China, and High-NA
ASML’s competitive advantage is almost irreplaceable, but its revenue is not. Revenue depends on the budgets of a handful of chipmakers, currently driven by data-center construction. In October, management said some customers wanted to place orders as early as 2029 and 2030, and that it was exploring a capacity increase for 2028 above the previously announced 30 %. But interest in orders for distant years is not yet an order.
The second risk is geopolitics. EUV systems cannot be supplied to China because of export restrictions, while advanced DUV machines are subject to licensing requirements. China accounted for approximately 29 % of revenue in 2025; management expected roughly 20 % for 2026. The third risk is the technology pathway: TSMC has indicated that it does not yet need High-NA and can manage with multiple exposures. Slower adoption of High-NA would not threaten the monopoly, but it would slow growth in the average price per system.
What the market is paying
At a price of 1 635,57 USD, ASML has a market capitalization of approximately 631 mld. USD. This corresponds to a P/E of around 42 on trailing twelve-month earnings, around 35 on its own 2026 earnings estimate (roughly 47 USD per share), and around 26 on the next-period consensus according to the Stockanalysis aggregator. Free cash flow yield for 2025 is 1,9 %. Revenue of 49 to 50 mld. USD in 2026 is already at the lower end of the 49 to 67 mld. USD range that ASML outlined for 2030 at its November 2024 investor day. The share price therefore assumes a substantial beat of that target. Historical average multiples could not be verified using primary sources.