ASML vs AMAT: Which Semiconductor Stock to Buy Now?

Overview

• ASML’s monopoly in EUV technology positions it as the strongest near-term growth play in the semiconductor industry.

• Applied Materials offers diversified exposure, with advanced packaging set to benefit greatly from artificial intelligence demand.

• Geopolitical and export control risks remain the key challenge for both ASML and AMAT in sustaining semiconductor sales growth.

The semiconductor industry is at the center of the global technology boom, with artificial intelligence, advanced computing, and high-performance chips driving record investments. Two of the biggest names in semiconductor equipment manufacturing are ASML Holding and Applied Materials (AMAT). 

Both are essential suppliers to chipmakers, but they operate in different areas of the production process. Understanding their differences, latest performance, and growth prospects can help determine which stock looks stronger right now.

Business Focus and Role in the Industry

ASML is known for its dominance in lithography technology, which is the process of printing extremely small patterns onto silicon wafers to make advanced chips. It is the only company in the world capable of producing extreme ultraviolet (EUV) lithography machines, which are required for the most advanced chip manufacturing at nodes such as 3 nanometers and below. This monopoly gives ASML a strong competitive advantage, high pricing power, and long-term demand from leading chipmakers like TSMC, Samsung, and Intel.

Applied Materials, on the other hand, covers a much broader range of semiconductor manufacturing processes. Its equipment is used for deposition, etching, ion implantation, inspection, and advanced packaging. This diversity means Applied Materials has exposure to many different parts of the chip industry, from the most advanced logic chips to mature-node chips used in automotive and industrial applications. It does not have a monopoly like ASML, but its wide product range allows it to serve a much larger market.

Recent Financial Performance

In the second quarter of 2025, ASML reported net sales of €7.7 billion, with a strong gross margin of 53.7% and net income of €2.3 billion. The company expects full-year 2025 sales to grow around 15% compared to the previous year, with gross margins holding above 50%. Orders in the quarter reached €5.5 billion, including €2.3 billion from EUV machines, which signals strong demand into 2025 and beyond.

Applied Materials reported revenue of about $7.10 billion in its fiscal second quarter of 2025. Semiconductor systems, which make up the majority of its business, contributed $5.26 billion. While earnings per share were better than expected, revenue slightly missed forecasts due to some project delays in the automotive and industrial chip segment. The company guided for fiscal third-quarter revenue of around $7.2 billion, suggesting stable near-term demand despite headwinds.

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Technology Advantage and Product Developments

The main advantage of ASML stock price lies in its EUV technology, which is essential for the smallest and most powerful chips. In mid-2025, the company shipped its first High-NA EUV system, called the EXE:5200. This machine is the next step in resolution capability and will be used in high-volume manufacturing later this decade. Intel is among the first customers for this tool, which will help enable chips at the 14A node and beyond. This shows that ASML’s technology roadmap is well aligned with the needs of leading chipmakers.

Applied Materials does not compete directly with ASML in lithography but has its own strengths. One of the fastest-growing areas for Applied is advanced packaging, which connects multiple chiplets together to form powerful processors, especially for AI applications. This segment generated about $1.7 billion recently and is expected to double as AI chips become larger and more complex. Because packaging demand is not as restricted by export controls, it offers a relatively safe growth path.

Exposure to China and Geopolitical Risks

Both companies are affected by US and international export restrictions on selling advanced chip-making tools to China, but the impact is different for each.

ASML cannot ship its most advanced EUV machines to China, and some advanced DUV models are also restricted. Despite this, China still accounts for more than 25% of ASML’s revenue, mainly through sales of equipment for mature and mid-level chips. This shows that demand from China is still strong for products that are not under the strictest export controls.

Applied Materials has seen a sharper decline in China sales. In recent quarters, the share of revenue from China dropped from over 40% to around 25% due to tighter U.S. restrictions and reduced Chinese spending on certain advanced tools. While the company still sells to China, any further tightening of export rules could have a bigger impact on Applied than on ASML.

Demand Drivers for Growth

For ASML, the main drivers are advanced logic chips used in AI, smartphones, and high-performance computing, as well as high-bandwidth memory (HBM) for AI systems. EUV demand is expected to rise by about 30% in 2025, and the introduction of High-NA technology will strengthen its leadership position for years to come.

AMAT stock price benefits from multiple growth areas at once. The company serves advanced foundries, memory chip producers, and makers of chips for automotive and industrial markets. Its packaging business is growing rapidly, thanks to the AI boom, and demand for mature-node chips remains strong in areas such as electric vehicles, sensors, and communications equipment.

Short-Term vs. Long-Term Outlook

In the near term, ASML’s story is cleaner and more predictable. It is delivering double-digit revenue growth, stable margins above 50%, and has a strong backlog of orders. The High-NA EUV rollout adds an extra layer of excitement and competitive advantage.

Applied Materials is also well-positioned for the long term but is dealing with more short-term uncertainty. The slowdown in China sales and some weakness in automotive and industrial chips have weighed on results. However, as AI packaging projects scale up and memory and foundry spending recover, Applied could see stronger growth in 2026 and beyond.

Valuation Considerations

ASML typically trades at a higher valuation because of its monopoly position in EUV and its critical role in the semiconductor value chain. Investors are willing to pay a premium for its technology leadership and predictable demand from the world’s most advanced chipmakers.

Applied Materials often trades at a lower valuation due to its exposure to more competitive markets and greater sensitivity to policy changes. However, this also means it can offer better relative value for investors looking for a broader, more diversified semiconductor equipment play.

Risks to Watch

The biggest risks for both companies are related to geopolitics and export controls. Any further tightening of restrictions could reduce sales to China, with Applied potentially more vulnerable in the short term. Another risk is customer spending cycles if chipmakers slow down investments in new fabs or delay equipment purchases, revenue growth could be affected. Supply chain disruptions or competition from new technologies could also play a role over the longer term.

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Final Verdict

For investors seeking a pure play on leading-edge chip technology and AI-driven chip production, ASML stands out as the stronger choice right now. Its monopoly in EUV, growing demand for advanced chips, and the rollout of High-NA systems make it a clear leader with strong near-term momentum.

Applied Materials remains an attractive option for those who want exposure to multiple parts of the semiconductor manufacturing process, including the fast-growing advanced packaging segment. While short-term headwinds are real, its broader product range and AI-related opportunities could drive strong growth over the longer term.

If a single stock had to be picked at this moment, ASML offers the cleaner risk-reward profile over the next 12–18 months. However, holding both could provide a balanced approach, capturing ASML’s dominance in advanced lithography and Applied Materials’ growth in packaging and diverse semiconductor processes.

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