## **Pros:** ✅ **Absolute Monopoly in EUV:** ASML is the only company in the world capable of manufacturing extreme ultraviolet (EUV) lithography systems. This is not a temporary advantage. Building a competing product requires decades of R&D, billions in investment, and a supply chain spanning hundreds of specialized suppliers globally. Every advanced chip made by TSMC, Samsung, or Intel Foundry depends on ASML equipment. ✅ **Market Growth:** Rising needs for advanced chips in AI, smartphones, and data centers ensure long-term demand for ASML’s machines from major chipmakers. Given its strong competitive position with no direct competitor, ASML is expected to grow faster than the overall semiconductor market. ✅ **Recurring Revenue Longevity:** ASML's lithography machines, known for their durability of more than 30 years, provide a safe source of recurring service revenue. The significant switching costs and technological leadership of ASML make it difficult for competitors to challenge its dominance. ✅ **Margins Increase Potential:** With the increase in sales of its machines and in the total installed base, the share of the more profitable services business is set to expand in the years ahead. ✅ **Strategic AI Partnership:** Announced partnership with leading European AI firm Mistral in September 2025 to "get closer and closer to the AI world," positioning ASML to better understand and serve AI-driven semiconductor demand. ✅ **Financials:** The company's sales have grown constantly over the last years. Margins are strong and the firm has a good cash position. ## **Cons:** ❌ **Tariffs &** **Export Controls to China:** Growth prospects could be impeded by tightening export controls, especially regarding China and Asia. This external risk, influenced by U.S. government policy, is beyond ASML's control. ❌ **China Revenue Declining Sharply:** China's share of total revenue is expected to fall to around 20% in 2026, down from 33% in full-year 2025 and 36% in Q4 2025 alone, as export control restrictions bite and prior backlog-driven shipments normalize. This is a structural step-down in a historically important revenue source that will weigh on near-term growth. ❌ **Industry Cyclicity:** The nature of the semiconductor industry is a threat in the event of a downturn in industry activity. ❌ **Product Costs & Innovation Pressure:** The Business model, centered around low-volume but high-cost lithography machines, places a premium on continuous innovation. Failure to innovate could lead customers to seek alternatives. ❌ **Supply Chain Vulnerabilities:** ASML's reliance on a limited number of suppliers for certain critical components pose additional risks. ❌ **Valuation:** High valuation for an european company.