ASML's Installed Base Management Business Picks Up: What's Driving it?

ASML Holding’s ASML upgrade and service business has been a strong contributor to its Installed Base Management (IBM) segment in the first half of 2025 and remained strong throughout the third quarter of 2025. The upgrade business also benefits from lower cost, lower tariff impact and widened gross margin.

In 2025, ASML made strong progress in completing a growing number of field upgrades of NXE:3800E systems with 220 wafers per hour configuration. ASML’s second half of 2025 IBM business kept pace with the first half of the year.

Earlier in 2025, IBM’s strength was more upgrade-driven and in the second half of 2025, it was toward recurring service revenues. ASML’s expanding Extreme Ultraviolet (EUV) Lithography installed base is increasingly driving service demand. As the company ventures into sub-2nm production with High Numerical Aperture (High-NA) EUV systems, the IBM business is expected to gain in 2026 as well.

ASML projects its IBM business revenues to be €2.1 billion in the fourth quarter of 2025. ASML Holding expects fourth-quarter 2025 revenues to be between €9.2 billion and €9.8 billion, suggesting a 26.3% sequential increase. The Zacks Consensus Estimate for ASML’s 2025 revenues indicates 23.7% year-over-year growth.

How Competitors Fare Against ASML

ASML is effectively the sole player in lithography system upgrades for its own installed base, especially in EUV space. However, in the broader semiconductor equipment market, ASML competes with companies like Lam Research LRCX and Applied Materials AMAT.

Lam Research is an established wafer fabrication equipment manufacturer that is established in the memory space. Lam Research’s memory segment, accounting for both Dynamic Random Access Memory and Non-Volatile Memory divisions, is gaining traction on the back of AI.

Applied Materials supplies equipment used in chip fabrication, including deposition and etching tools that are essential for both advanced and mature nodes. As chips become more complex with AI and high-performance workloads, Applied Materials’ tools aid in designing and making efficient and smaller node chips.

ASML’s Price Performance, Valuation and Estimates

Shares of ASML have gained 54.3% in the past six months compared with the Computer and Technology sector’s growth of 19.2%.

ASML 6-Month Price Performance Chart

From a valuation standpoint, ASML trades at a forward price-to-sales ratio of 12.58X, higher than the sector’s average of 7.46X.

ASML Forward 12-Month (P/S) Valuation Chart

The Zacks Consensus Estimate for ASML’s fiscal 2025 and 2026 earnings implies year-over-year growth of 39.7% and 4.3%, respectively. The consensus estimate for fiscal 2025 and 2026 has been revised upward in the past seven days.

ASML currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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