Who Is ASML? An Infrastructure-Like Growth Company That Controls the “Lithography” Process for Leading-Edge Semiconductors

* This report is prepared using data as of 2026-01-07.

1. ASML’s business, explained like you’re in middle school

ASML builds “lithography tools” used in semiconductor fabs. A lithography tool is a massive machine that “prints” a chip’s blueprint onto a silicon wafer—and it largely determines how fine the circuits can be (in other words, how far chip performance can be pushed).

In plain English, ASML is like an ultra-high-end printing press maker for chip factories. The catch is that it has to print incredibly tiny, nearly invisible “text” at scale with near-zero errors—and only a handful of companies can make that work reliably in a real factory (high-volume manufacturing) setting.

Who it creates value for (customers)

ASML doesn’t sell to consumers. Its customers are chipmakers running large-scale fabs (companies mass-producing leading-edge logic, memory, and more). These tools are extremely expensive and are purchased as part of fab capital-expenditure budgets.

What it sells (three pillars)

• Leading-edge lithography tools: Often indispensable for producing leading-edge chips. In the EUV generation in particular, ASML is widely viewed as holding something close to a de facto monopoly.
• Prior-generation lithography tools: Still needed for mature nodes and cost-sensitive applications. Demand tends to persist depending on the country and end market.
• Post-installation business (maintenance, parts, upgrades): The relationship doesn’t end at installation. Ongoing maintenance, consumable replacement, repair support, and performance improvements via retrofits and feature additions continue over time. ASML has repeatedly stated that upgrades contribute meaningfully to revenue and margins.

How it makes money (revenue model)

There are two primary revenue streams: system sales (large-ticket purchases by fabs) and recurring post-install revenue (maintenance, parts, retrofits, performance upgrades, and on-site support). The key dynamic is straightforward: the more systems that get installed, the more the post-installation business tends to build.

Why it is chosen (core of the value proposition)

• Delivers leading-edge precision in a production-ready way: As scaling advances, patterning becomes dramatically harder. The value is in making it work in high-volume manufacturing.
• Keeps massive, complex tools running inside the fab: Reliability, uptime, and yield impact (good-die rate) are critical—and they directly support the strength of the post-installation business.
• Provides support through customer enablement: ASML continues to expand training, operational support, and improvement programs, and initiatives such as training hub concepts have been discussed.

Future pillars (important initiatives even if small today)

• High NA (next-generation EUV): Tools that can print even finer circuits. Deliveries and installations across multiple customers are progressing, and capacity expansion has also been reported. This could be central to securing the next generation.
• Products for Advanced Packaging: Beyond scaling individual chips, ASML is also addressing the trend toward “combining multiple chips to achieve higher performance,” and it has stated that it shipped its first product.
• Embedding AI into tools and fab operations: Less a standalone new business and more an internal capability upgrade to run tools better and improve yield—but still an important area that could influence future differentiation and margins.

2. Long-term fundamentals: what “type” of company is ASML?

For long-term investing, the first step is to understand what kind of growth a company has actually delivered. ASML has posted double-digit growth across revenue, earnings, and cash flow, supporting the case that it has behaved like a long-duration growth company.

Growth (5-year and 10-year profile)

• EPS (earnings per share) CAGR: ~25.6% per year over the past 5 years, ~21.6% per year over the past 10 years
• Revenue CAGR: ~19.0% per year over the past 5 years, ~17.0% per year over the past 10 years
• Free cash flow (FCF) CAGR: ~30.5% per year over the past 5 years, ~30.1% per year over the past 10 years

Profitability (earning power)

• ROE (FY2024): ~41.0% (at a high point within the 10-year range, and on the higher side within the past 5-year distribution)
• FCF margin (latest TTM): ~29.3% (mid-to-high range within the past 5-year distribution)

Financial strength (leverage and cash on hand)

• Debt-to-equity (FY2024): ~0.27x
• Net Debt / EBITDA (FY2024): ~-0.76x (indicates cash and equivalents exceed debt; not abnormal given how the metric is defined)

EPS growth breakdown (one-sentence summary)

Over the past five years, strong revenue growth combined with a long-term decline in shares outstanding makes EPS growth easy to attribute to “revenue growth” plus “share count reduction (buybacks, etc.).”

3. ASML through Peter Lynch’s six categories

Conclusion: best described as a Fast Grower (growth stock)

ASML fits most closely into the Fast Grower (growth stock) bucket. The case rests on its high EPS and revenue growth over the past 5 and 10 years, along with ROE of ~41.0% in FY2024.

That said, even within growth stocks, ASML is less “hot consumer product” and more “infrastructure-like growth” embedded in a core fab step. That also implies a setup where valuation can be more sensitive when expectations reset (the scale of expectations is discussed later in the valuation section).

Checking cyclicality, turnaround characteristics, and asset-play characteristics

• Cyclicals: In annual data, ASML had a loss-making period (negative net income) in the early 2000s, followed by sustained profitability. Over the most recent 10–5 years, expansion has been the dominant pattern, so a classic “repeatable peaks and troughs” cycle does not appear to be the primary driver.
• Turnarounds: Over the last 5- and 10-year windows, this is not a “loss-to-profit rebound” story; the company is already operating in a profitable, high-return phase.
• Asset Plays: With FY2024 PBR at ~14.6x, it does not fit an asset-play profile focused on undervalued assets.

4. Is it maintaining its “type” today? Short-term momentum and the last 8 quarters

Even when the long-term profile looks strong, it’s still worth checking whether the near-term picture is starting to fade. For ASML, the latest year (TTM) looks broadly consistent with a growth-stock profile.

Latest TTM: growth is actually stronger (accelerating)

• EPS (TTM, YoY): +44.4% (above the long-term >20% annual pace)
• Revenue (TTM, YoY): +22.8% (above the long-term ~17–19% annual pace)
• FCF (TTM, YoY): +239.5% (a very large increase, but note that FCF is prone to timing-driven volatility)

On that basis, the momentum call is Accelerating. The outsized FCF jump shouldn’t be read as “permanently higher capability,” but rather as “cash generation was unusually strong over the past year.”

Last 2 years (roughly 8 quarters): on an average basis, “not as strong as the last year”

• EPS: 2-year CAGR ~13.0% per year (strong upward trend)
• Revenue: 2-year CAGR ~8.1% per year (strong upward trend)
• FCF: 2-year CAGR ~71.4% per year (strong upward trend)

The last year looks very strong, but a two-year average shows EPS and revenue still growing at a slower pace than the one-year snapshot. That isn’t a contradiction—just a difference in time window—and can be described as “appearing to re-accelerate over the last year” (without speculating on why).

Near-term margin quality: not a straight line up, but holding around 30%

Operating margin (FY basis) moved FY2022: ~30.7% → FY2023: ~32.8% → FY2024: ~31.9%—in other words, “up, then modestly down.” It’s not a steady improvement trend, but the level has at least remained in the 30% range.

5. How to view bankruptcy risk: financial soundness (debt, interest, cash)

For individual investors, the practical question is: “Can the company withstand a growth slowdown?” As of FY2024, ASML’s leverage metrics do not suggest a heavy debt burden.

• Debt-to-equity (FY2024): ~0.27x
• Net Debt / EBITDA (FY2024): ~-0.76x (net cash-leaning)
• Cash ratio (FY2024): ~0.64
• Interest coverage (FY2024): ~57.3x

Viewed through debt-service capacity and liquidity, the data points to low bankruptcy risk. That said, when upfront investment rises—such as during next-generation ramps and supply-capacity expansion—reported cash generation can swing, which is worth keeping in mind as a feature of the business.

6. Dividends: positioning (best viewed as shareholder returns for a growth company)

Dividend level and relative positioning

• Dividend yield (TTM): ~0.68% (as a rule of thumb, below 1%; more “growth + supplemental return” than a stock held primarily for dividends)
• Versus historical averages: latest TTM is lower versus the past 5-year average of ~0.81% and past 10-year average of ~0.77% (either the share price is high, the dividend level is relatively low, or both)
• Dividend per share (TTM): ~6.58 dollars
• Payout ratio (earnings basis, TTM): ~25.9% (a level that does not return all earnings and leaves room for investment)

Dividend growth (DPS Growth)

• DPS CAGR: past 5 years ~15.7%, past 10 years ~26.4%
• Latest TTM dividend growth: YoY ~+8.6% (a more moderate pace than historical CAGR)

ASML has a history of raising dividends, but the most recent year’s dividend growth is more moderate than the long-term average. Rather than concluding “growth is slowing,” the clean takeaway is simply that dividend growth is currently running below its historical average.

Dividend sustainability

• Payout ratio (earnings basis, TTM): ~25.9% (lower than the past 5-year average of ~32.4% and past 10-year average of ~31.3%)
• Payout ratio (FCF basis, TTM): ~27.0%
• FCF dividend coverage (TTM): ~3.70x

On both earnings and cash flow, the dividend burden does not look excessive, and the FCF coverage ratio is high—so the data supports framing it as “relatively safe-leaning.” In addition, as of FY2024 the company is net cash-leaning and interest coverage is high, suggesting the balance sheet is not an obvious constraint on dividends.

Dividend reliability

• Years paying dividends: 17 years
• Consecutive years of dividend increases: 1 year
• Record of a dividend cut in 2023 on an annual basis

ASML has a long record of paying dividends, but it is not necessarily a company that increases the dividend every single year. It’s important to recognize that dividends can move with investment cycles, rather than assuming a consistently rising “rate of increase” (this is not a prediction of future cuts).

Capital allocation (dividends vs reinvestment)

In lithography, competitiveness is driven by technology, R&D, and manufacturing capability, and it’s critical to expand supply capacity and advance the roadmap in sync with customers’ leading-edge investment cycles. As a result, capital allocation is unlikely to be “finished” with dividends alone; this is a business that typically requires substantial reinvestment in R&D, production capacity, and supply-chain resilience.

Numerically, paying out ~25.9% of earnings and ~27.0% of FCF as dividends in the latest TTM looks consistent with an approach where dividends are paid while most cash remains available for operations, investment, and other uses.

Investor fit

• Income investors: With a ~0.68% yield, it’s unlikely to screen as a top-tier dividend-income holding. Still, the lower payout ratio and high FCF coverage are positives from a sustainability standpoint.
• Growth / total-return focused: Dividends aren’t the main driver, but they are a meaningful component of shareholder returns, and the data does not suggest dividends are materially crowding out growth investment capacity.

7. Where valuation stands today: where is it versus ASML’s own history (six metrics)

Here, without comparing ASML to the market or peers, we place today’s valuation and quality metrics within ASML’s own historical range (primarily 5 years, with 10 years as a supplement). Note that metrics like PER are TTM-based, while ROE and Net Debt / EBITDA are FY-based, so the set is mixed. Where FY and TTM differ, we treat that as a time-window difference.

PEG (valuation relative to growth)

• Current: 1.09x
• Past 5 years: within the normal range, slightly above the midpoint
• Past 10 years: within the normal range
• Direction over the last 2 years: broadly flat to modest fluctuations

PEG sits within the normal range in both the 5- and 10-year views, and it is not historically at an extreme.

PER (valuation relative to earnings)

• Assumed share price (report date): 1228.19 dollars per share
• Current PER (TTM): 48.3x
• Past 5 years: within the normal range but on the high side
• Past 10 years: slightly above the normal range
• Direction over the last 2 years: includes phases of upward movement

PER is toward the upper end of the past 5-year range and slightly above the past 10-year range. That’s a setup where growth expectations can be readily priced in, and it also implies valuation can be more sensitive if growth slows—an important “shape” to understand (without making forecasts).

Free cash flow yield (valuation relative to cash generation)

• Current (TTM): ~1.98%
• Past 5 years: within the normal range but on the low side
• Past 10 years: within the normal range but on the low side (near the lower bound)
• Direction over the last 2 years: includes phases of decline

FCF yield is on the low end versus its historical range (a lower yield typically corresponds to a higher share price and/or lower FCF, but here we’re only describing positioning, not causality).

ROE (capital efficiency)

• Current (FY2024): ~41.0%
• Past 5 years: within the normal range but leaning toward the lower side
• Past 10 years: within the normal range, mid-to-upper side
• Direction over the last 2 years: includes phases of decline (from peak levels toward normalization)

ROE looks strong on a 10-year view, but sits toward the lower side within the 5-year distribution. That’s not inconsistent—it reflects the time-axis: ROE rose meaningfully over the decade, and more recently remains high but has come down from peak levels.

Free cash flow margin (quality of cash generation)

• Current (TTM): ~29.3%
• Past 5 years: mid-range within the normal range (mid to slightly lower)
• Past 10 years: upper side within the normal range
• Direction over the last 2 years: flat to modest fluctuations

FCF margin is mid-range over five years and higher over ten years, and it’s a metric that tends to look better the longer the time horizon.

Net Debt / EBITDA (financial leverage)

• Current (FY2024): ~-0.76x
• Past 5 years: below the normal range (more negative)
• Past 10 years: below even the lower bound of the normal range (more negative)
• Direction over the last 2 years: includes phases of decline (moving more negative)

Net Debt / EBITDA is an inverse indicator, where lower (more negative) implies a larger cash buffer and greater financial flexibility. ASML screens below the normal range (more negative) on both 5- and 10-year views, pointing to a historically strong net-cash-leaning phase.

Overall picture across the six metrics

• Valuation (PEG, PER, FCF yield): PEG near the median, PER on the high side over 5 years and slightly above range over 10 years, FCF yield on the low side
• Profitability/quality (ROE, FCF margin): high-leaning over 10 years, but not outstanding within the most recent 5-year distribution
• Balance sheet (Net Debt / EBITDA): breaks lower (more negative), indicating a strongly net-cash-leaning phase

8. Cash flow tendencies: are EPS and FCF aligned?

For growth companies, one recurring concern is when “profits are rising but cash isn’t.” ASML has also delivered strong long-term FCF growth (10-year CAGR ~30.1%), and in the latest TTM FCF jumped +239.5% YoY.

That said, FCF is inherently timing-sensitive, and in equipment-heavy businesses it can swing with working capital (inventory, receivables, payment terms) and capex. So rather than treating last year’s surge as “permanently repeatable,” it’s more useful to keep checking the consistency between earnings (EPS) and cash (FCF) across multiple periods.

Also, next-generation (High NA) ramps and supply-capacity expansion often require upfront investment, so the way cash generation “looks” can shift by phase—another business characteristic to keep in view.

9. Why ASML has won: the core of the success story

ASML’s core value is its ability to deliver the tools and operational execution that make lithography—the critical step in “mass-producing leading-edge semiconductors”—work in real production. EUV is extremely hard to substitute, and it functions like an industrial foundation that shapes customers’ manufacturing capability itself (how far they can scale and how much they can improve yield).

Importantly, ASML’s profit engine isn’t just leading-edge EUV. It also has meaningful pillars in prior-generation DUV and in the post-installation business (maintenance, parts, and performance upgrades). As the installed base grows, recurring revenue tends to accumulate, adding “stickiness” even if it can’t fully remove the cyclicality tied to capex cycles.

What customers value (Top 3)

• Execution that pushes the limits of scaling: Not just lab-grade technology, but the ability to deliver HVM uptime and yield in practice.
• Continuous improvement and performance upgrades after installation: Value compounds through maintenance, parts, and upgrades.
• Support that goes deep into customer processes: A direction that improves productivity and yield through software and operational support, including AI.

What customers could be dissatisfied with (Top 3)

• Installation and ramp burden: These tools are massive and complex, and ramping them can become an “all-hands” effort—from fab design through staffing operations.
• Supply constraints and lead times: With many critical components dependent on single suppliers, bottlenecks can directly disrupt investment plans.
• Uncertainty from regulation and export controls: In certain regions, policy can shift what can and cannot be purchased, potentially destabilizing plans.

10. Is the current strategy consistent with the success story (story continuity)?

The strategic narrative over the last 1–2 years looks like an extension of the existing success story, while key exogenous variables have become more prominent.

Change ①: AI tailwinds and regional mix shifts (regulation) are both in play

ASML has indicated that AI-driven investment momentum is spreading beyond leading-edge logic into advanced DRAM. At the same time, China revenue (particularly DUV-centric) is sensitive to policy and regulation, and there is also mention of a view that China demand will decline materially in 2026. In other words, it’s not just “growing with AI”—the mix question of “which regions and which customers can buy” is becoming more important than it used to be.

Change ②: from “tool-only” toward “tool + operational optimization (including AI)”

ASML has described an ambition to embed AI across its portfolio to improve tool performance and customer-process productivity and yield. This puts its long-standing strengths—keeping tools running on the factory floor and supporting customers—more front and center, and it aligns well with the core success story.

11. Quiet Structural Risks: how it could break precisely because it looks strong

ASML is often framed as a company with strong financials and high barriers to entry. If something were to go wrong, it’s more likely to come from external shocks and execution strain than from simply “losing to competitors.” The following is not a forecast—just a way to organize structural risks.

• Concentration in customer dependence: Delays or policy changes in capex plans by a small number of very large customers could drive volatility in orders and revenue.
• Regulation-driven shifts in demand composition: There is mention of a view that China revenue in 2026 will decline materially versus 2024–2025. Rather than demand disappearing outright, the “mix of regions and products that can be sold” changes, making mix management and capacity planning more disruption-prone.
• Supply-chain bottlenecks: EUV/High NA depends heavily on ultra-precision components; constraints can spill over beyond lead times into ramp execution, utilization, and the pace of cash conversion.
• Encroachment by localized substitute technologies: If nanoimprint and similar approaches gain traction in limited applications, ASML could miss incremental demand in specific pockets (less a full replacement than a gradual boundary shift).
• Risk that profitability peaks in a way that diverges from the story: ROE is on the lower side within the past 5-year distribution, and operating margin has moved “up → modest down” over the last three years. Even with strong demand, profitability could soften if ramps prove difficult or costs rise—often treated as an early-warning area.
• Organizational culture and talent wear-and-tear: Because field ramp, maintenance, and continuous improvement are central, hiring difficulty, higher attrition, and burnout can show up with a multi-year lag in lead times and quality. Reports of HR adjustments in the U.S. in response to regulatory requirements also suggest that rising region-by-region complexity could be a wear factor (this does not, by itself, imply cultural deterioration).

12. Competitive landscape: who it competes with, and what tends to become a threat

Lithography is about making the process work, which makes pure price competition less likely; outcomes depend on combined strength across technology, supply chain, and field execution. Competition tends to operate on two layers.

Two-layer competition structure

• Leading-edge (EUV/High NA): Less a market where equivalent products sit side by side, and more a decision framework where customers choose “whether to move to that generation.” Threats are typically less about new entrants and more about alternative approaches (different methods, process design) or roadmap delays.
• Prior generation (DUV): Competitors exist, and competition plays out by application, customer, and region. Still, because DUV is used alongside EUV even in leading-edge fabs, integration across “EUV + DUV + maintenance + operational optimization” can be a differentiator.

Key competitors and substitute players (including application-limited)

• Nikon: Competes in DUV (ArF, etc.). It announced the start of order intake for a new ArF scanner and continues to improve its DUV lineup.
• Canon: Beyond lithography for mature nodes, it is promoting nanoimprint. In certain limited applications, it could become an option that changes the lithography approach.
• Chinese manufacturers such as SMEE (Shanghai Micro Electronics Equipment): While behind at the leading edge, they could be chosen for certain projects under localization policy.
• Emerging players said to be Huawei-affiliated (e.g., SiCarrier-related moves): Less a direct commercial competitor and more a factor that could shift regional procurement centers of gravity over the medium to long term.
• (Supplementary) Process control/inspection such as KLA: Not a direct lithography competitor, but it can influence yield and utilization and may become a factor in how customers allocate capex.

If competition were to break down, what “shape” would it take? (KPI lens)

• Progress of High NA adoption (expanding from research use to volume manufacturing use)
• Customers’ lithography strategies (expansion/contraction of EUV layers used, degree of reliance on extending DUV)
• Competitive conditions in DUV (which device segments Nikon/Canon’s new models gain presence in)
• Installed Base health (whether growth in tool count and service demand are accumulating consistently, and whether supply constraints are affecting utilization)
• Expansion of substitute approaches (nanoimprint, etc.) by application (whether it is expanding from specific layers to multiple layers)
• Practical impact of regulation/localization (whether changes in what can be sold/serviced are affecting customer roadmaps)

13. Moat (sources of competitive advantage) and durability

ASML’s moat isn’t built on a single patent or one breakthrough. It’s a bundled advantage: not only tool performance that enables leading-edge lithography in volume manufacturing, but also ramp execution, quality assurance, field support, and supply-chain integration—all tightly interlocked.

Moat types (what creates barriers to entry)

• Technical difficulty: EUV/High NA is extraordinarily hard.
• Manufacturing and quality-assurance complexity: ASML must mass-produce massive, complex tools and keep quality stable.
• Field-operations learning curve: Accumulated ramp and improvement experience in customer fabs raises the odds of success in the next generation.
• Switching costs: Because it touches fab design, peripheral equipment, and workforce training, replacement is not a simple price-based decision.

Factors that strengthen durability / factors that erode it

• Strengthening factors: Growth of the Installed Base, continued transition to High NA, and joint optimization with customers.
• Eroding factors: Regulation that changes which markets can be sold to or serviced, and localization policies that shift procurement rules in ways that institutionally redirect demand.

14. Structural position in the AI era: tailwind or headwind?

ASML isn’t an AI company at the software/OS layer. It sits closer to industrial infrastructure—positioned to benefit as AI-era compute demand supports real-world investment in leading-edge logic and advanced DRAM.

Why it tends to strengthen in the AI era (structure)

• Network effects (industrial type): Leading-edge HVM know-how accumulates across customers, suppliers, and service organizations, raising the probability of successful next-generation ramps.
• Data advantage: Field data from tool operations, maintenance, and process optimization feeds improvement loops and tends to translate into customer outcomes (yield and utilization).
• Degree of AI integration: ASML has described embedding AI not as a bolt-on, but into tools, productivity, and yield improvement, and has highlighted portfolio-wide integration via a partnership with Mistral AI.
• Mission-critical nature: Lithography is a core step in volume manufacturing and can determine whether the process works at all. The Installed Base also supports recurring revenue.

Where AI substitution risk could exist

For the core function—making leading-edge lithography work in high-volume manufacturing—AI is less likely to replace it directly and more likely to expand demand. If substitution risk shows up, it is more likely to be application-limited replacement via alternative lithography approaches, or regulation narrowing the “markets that can be sold to / scope that can be serviced.”

15. Leadership and corporate culture: an organization that can keep the story running?

ASML wins not only on technology, but also on field execution—so organizational capability is part of the competitive edge. Based on CEO Christophe Fouquet’s communications, the messaging appears consistent: advance the technology roadmap with customer value and collaboration at the center.

CEO vision and consistency

• Continue advancing lithography technology (EUV/High NA) that enables leading-edge volume manufacturing on the factory floor, aligned with customer roadmaps.
• Maximize customer value not only through standalone tool performance, but also through maintenance, improvement, and ramp support.
• Recognize that while AI investment is a tailwind, exogenous regional shifts—such as a decline in China demand—can also matter.

Persona, values, priorities (abstracted from public communications)

• A leader who advances through collaboration: Frequently stresses cross-functional work, accessibility, and discussion rather than purely top-down direction.
• Customer-value centric: Success is framed not only as “technical correctness,” but as “making it work in customers’ volume manufacturing.”
• Views technical talent as a core asset: Consistent with succession planning and investment in development.

Patterns likely to show up culturally (generalized from employee reviews)

• Likely positives: Technically advanced environment with meaningful learning opportunities / high density of expertise / relatively open discussion culture.
• Likely negatives: Periods where processes feel heavy and decision-making feels slow / periods where evaluation systems feel unclear / high workload (pressure).

The “high workload” point isn’t a value judgment; it’s a predictable byproduct of ramping massive, complex tools inside customer fabs.

Adaptability: technology transfer and field talent development

• Disclosures include moves such as appointing a CTO and placing long-tenured internal talent into key roles, clarifying succession planning.
• Establishing a technical training hub (technical academy) in the U.S. is meaningful as an operational response to rising tool complexity and broader geographic dispersion.

Fit with long-term investors (culture and governance lens)

• Better fit: Investors focused on multi-year technology roadmaps, barriers to entry, and Installed Base-style recurring revenue.
• Aspects requiring attention: The risk that region-by-region compliance requirements increase the difficulty of cultural management, and that sustained technical/field workload leads to talent wear-and-tear (hiring, development, and retention can act as leading indicators).

16. Two-minute Drill for long-term investors: what hypothesis to use for ASML

ASML controls the lithography step that is unavoidable in leading-edge semiconductor volume manufacturing, and it has built infrastructure-like growth by layering post-install maintenance, parts, and upgrades on top of system sales. Long-term results show double-digit growth in revenue, EPS, and FCF, and even on a TTM basis revenue is +22.8% and EPS is +44.4%, suggesting the growth-stock profile is intact (and appears to be accelerating).

At the same time, the weak points are less about “losing to competitors” and more about regulation reshaping which markets can be served, volatility tied to capex decisions by a small number of customers, and supply constraints or talent wear-and-tear slowing the “speed of delivery.” Versus ASML’s own history, valuation shows PER on the high side over five years and slightly above range over ten years, with FCF yield on the low side—important context for a setup where expectations can be readily priced in.

Variables investors should watch (KPI tree highlights)

• Next-generation (High NA) ramp: Whether it transitions smoothly from research use to volume-manufacturing use, and how much ramp-support burden increases.
• Installed Base build: Whether growth in tool count and growth in maintenance/parts/upgrade revenue remain aligned.
• Spillover from supply constraints: Whether constraints affect not only delivery cadence but also service quality and customer utilization.
• Changes in regional/product mix: When regulation shifts what can be sold, whether it creates strain in capacity planning and the service organization.
• Talent (hiring, development, retention): What signals appear before high workload becomes chronic and slows ramp speed or degrades service quality.
• “Application expansion” of substitute technologies: Not full replacement, but where boundaries start to shift by step and application.