⚠ The Annuity Still Rides the Equipment CycleModerate threat

The installed-base annuity is the most defensive part of ASML's business, but it is defensive — installed-base management earned €8.2 billion in 2025, growing 25%¹ — but not bulletproof, and an honest account resists overstating its independence from the cycle. The service revenue grows with the installed fleet, and the fleet grows with equipment sales, so a severe or prolonged downturn in new-machine demand would, with a lag, slow the annuity's growth — and in a deep enough slump, customers running their fabs below capacity would trim even their service and upgrade spending toward the bare minimum needed to keep machines running. The floor beneath ASML's revenue is real and rising, but it is a floor that flexes.

The point is one of degree, not direction: the installed base makes ASML far more resilient than a pure equipment maker, providing a large, high-quality, recurring revenue stream that cushions the troughs and compounds through time. But it does not sever the company from the semiconductor cycle, and investors valuing ASML partly for the stability of its service business should remember that the stability is relative. The annuity turns a violently cyclical equipment business into a moderately cyclical one with a growing recurring core — a genuine improvement in quality, but not an escape from the industry's booms and busts. In the deepest downturns, even the blades feel the chill, just less than the razors do.