In the dynamic world of semiconductors, Applied Materials, Inc. (AMAT) and ASML Holding N.V. (ASML) stand out as industry leaders, each driving innovation in manufacturing equipment and advanced lithography systems. Both companies serve crucial roles in the chipmaking supply chain, targeting overlapping markets with cutting-edge technology strategies. This article will analyze their strengths and risks to help you decide which firm offers the most compelling investment opportunity.
Table of contents
Companies Overview
I will begin the comparison between Applied Materials and ASML by providing an overview of these two companies and their main differences.
Applied Materials Overview
Applied Materials, Inc. specializes in manufacturing equipment, services, and software for the semiconductor, display, and related industries. The company operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. It serves global markets including the US, China, Korea, Taiwan, Japan, Southeast Asia, and Europe, focusing on technologies essential for fabricating semiconductor chips and displays.
ASML Overview
ASML Holding N.V. develops and markets advanced semiconductor equipment systems, including lithography, metrology, and inspection systems. Its portfolio features extreme ultraviolet and deep ultraviolet lithography solutions crucial for semiconductor node manufacturing. Headquartered in the Netherlands, ASML operates worldwide across Asia, Europe, the Middle East, Africa, and the US, providing high-tech systems and services to chipmakers.
Key similarities and differences
Both Applied Materials and ASML operate in the semiconductor technology sector, supplying critical equipment and services to chip manufacturers globally. While Applied Materials offers a broader range of manufacturing equipment and services including display technologies, ASML specializes primarily in lithography and related metrology systems. Their global footprints overlap in major tech regions, but their product focuses and technological niches differ significantly.
Income Statement Comparison
The table below compares key income statement metrics for Applied Materials, Inc. and ASML Holding N.V. based on their most recent fiscal year data.
| Metric | Applied Materials, Inc. (AMAT) | ASML Holding N.V. (ASML) |
|---|---|---|
| Market Cap | 204.3B USD | 409.3B USD |
| Revenue | 28.4B USD | 28.3B EUR |
| EBITDA | 9.65B USD | 10.1B EUR |
| EBIT | 9.54B USD | 9.21B EUR |
| Net Income | 7.00B USD | 7.57B EUR |
| EPS | 8.71 USD | 19.25 EUR |
| Fiscal Year | 2025 | 2024 |
Income Statement Interpretations
Applied Materials, Inc. demonstrated steady revenue growth with a 4.39% increase from 2024 to 2025, accompanied by a solid gross margin of 48.67%. While net income slightly declined by 6.59%, the company maintained favorable EBIT margin growth of 13.58%, reflecting improved operational efficiency in the latest fiscal year despite some margin pressures on net income.
ASML Holding N.V. experienced more modest revenue growth of 2.56% from 2023 to 2024, with a strong gross margin of 51.28%. However, EBIT margin growth was slightly negative at -0.34%, and net income declined by 5.82%. EPS also fell by 1.54%, indicating some challenges in profitability and margin management during the most recent period.
Which one has the stronger fundamentals?
Based on the income statement evaluations, Applied Materials shows a more favorable income profile with 60% favorable metrics versus 20% unfavorable, driven by stronger EBIT and gross margin improvements. In contrast, ASML’s fundamentals appear less robust, with 50% unfavorable indicators and declining profitability metrics, suggesting comparatively weaker earnings performance over the examined period.
Financial Ratios Comparison
The table below compares key financial ratios for Applied Materials, Inc. (AMAT) and ASML Holding N.V. (ASML) based on their most recent fiscal year data.
| Ratios | Applied Materials, Inc. (AMAT) | ASML Holding N.V. (ASML) |
|---|---|---|
| ROE | 34.3% | 41.0% |
| ROIC | 22.0% | 24.9% |
| P/E | 26.6 | 34.8 |
| P/B | 9.11 | 14.25 |
| Current Ratio | 2.61 | 1.53 |
| Quick Ratio | 1.87 | 0.95 |
| D/E (Debt to Equity) | 0.32 | 0.27 |
| Debt-to-Assets | 18.1% | 10.3% |
| Interest Coverage | 30.8 | 56.2 |
| Asset Turnover | 0.78 | 0.58 |
| Fixed Asset Turnover | 6.15 | 3.91 |
| Payout Ratio | 19.8% | 33.8% |
| Dividend Yield | 0.74% | 0.97% |
Interpretation of the Ratios
Applied Materials, Inc. (AMAT) shows a strong financial profile with favorable net margin at 24.67%, ROE at 34.28%, and ROIC at 22.03%. The company benefits from solid liquidity and low debt ratios, though its high P/E of 26.58 and P/B of 9.11 are less attractive. Dividend yield is low at 0.74%, indicating modest shareholder returns supported by stable dividends and cautious buybacks.
ASML Holding N.V. (ASML) presents robust profitability with a net margin of 26.79%, ROE of 40.98%, and ROIC of 24.93%. The firm maintains a good current ratio at 1.53 and low debt levels. However, it faces high valuation multiples, including a P/E of 34.77 and P/B of 14.25. Its dividend yield of 0.97% reflects moderate distributions, balanced with reinvestment priorities.
Which one has the best ratios?
AMAT and ASML both deliver favorable overall ratio evaluations, with AMAT slightly leading at 64.29% favorable metrics versus 57.14% for ASML. AMAT’s stronger liquidity and lower leverage contrast with ASML’s higher profitability ratios but elevated valuation multiples. Both companies exhibit cautious dividend yields, reflecting balanced shareholder return strategies within the semiconductor industry.
Strategic Positioning
I will now compare Applied Materials (AMAT) and ASML’s positioning to understand their respective business strategies better.
AMAT Positioning
Applied Materials holds a significant share in semiconductor manufacturing equipment, with Semiconductor Systems driving most of its $19.9B revenue in 2024, supported by growth in Applied Global Services at $6.2B. Display segment revenues declined notably in recent years. Growth accelerated recently, but margin pressure may arise from segment shifts and competitive market dynamics.
ASML Positioning
ASML dominates advanced lithography systems, with €21.8B product revenue in 2024, heavily supported by EUV and Arfi technologies. Its metrology and inspection systems segment, though smaller at €645M, complements core offerings. The company experienced steady growth with slight product revenue declines offset by strong service demand, maintaining technological leadership amid competitive pressures.
AMAT vs ASML Positioning
AMAT offers a diversified portfolio across semiconductor equipment, services, and display markets, which spreads risk but may dilute focus. ASML concentrates on lithography and related systems, benefiting from technological leadership but facing higher dependency risks on core products. Both approaches reflect strategic trade-offs between diversification and specialization.
Stock Comparison
The past year showed significant bullish momentum for both Applied Materials, Inc. and ASML Holding N.V., with Applied Materials experiencing stronger gains and accelerating price appreciation compared to ASML’s more moderate rise.
Trend Analysis
Applied Materials, Inc. posted a 53.63% price increase over the last 12 months, signaling a bullish trend with accelerating momentum. The stock ranged between 126.95 and 268.0, showing substantial volatility with a standard deviation of 28.68.
ASML Holding N.V. recorded a 21.7% gain over the same period, also bullish with acceleration. Price fluctuated notably between 605.55 and 1099.47, with a higher standard deviation of 131.87, indicating greater volatility than Applied Materials.
Comparing the two, Applied Materials delivered the highest market performance over the past year, outperforming ASML by more than 30 percentage points in price appreciation.
Analyst Opinions Comparison
I will now compare Applied Materials and ASML’s ratings, grades, and price targets to gauge analysts’ opinions.
Applied Materials Rating
Applied Materials holds a B+ rating with an overall score of 3, showing strong return on equity and assets at 5, but weaker debt to equity and valuation metrics.
ASML Rating
ASML is rated A- with an overall score of 4, matching Applied Materials in return on equity and assets, while showing better debt management and discounted cash flow scores.
Which one is the best rated?
ASML is the best rated with a higher overall score of 4 and a superior letter grade of A-, reflecting stronger financial health and valuation compared to Applied Materials.
Applied Materials, Inc. Grades
Below is a summary of recent grades and rating actions from recognized grading companies for Applied Materials, Inc.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Mizuho | Maintain | Neutral | 2025-12-17 |
| Jefferies | Maintain | Buy | 2025-12-15 |
| Wells Fargo | Maintain | Overweight | 2025-12-15 |
| Keybanc | Maintain | Overweight | 2025-12-02 |
| UBS | Upgrade | Buy | 2025-11-25 |
| Mizuho | Maintain | Neutral | 2025-11-14 |
| Citigroup | Maintain | Buy | 2025-11-14 |
| Morgan Stanley | Maintain | Overweight | 2025-11-14 |
| Cantor Fitzgerald | Maintain | Overweight | 2025-11-14 |
| Craig-Hallum | Downgrade | Hold | 2025-11-14 |
Overall, Applied Materials shows a stable to positive rating trend, with a majority of maintained or upgraded Buy and Overweight ratings, indicating confidence in the stock.
ASML Holding N.V. Grades
The table below presents recent grades and rating changes from verified grading companies for ASML Holding N.V.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| B of A Securities | Maintain | Buy | 2025-12-03 |
| JP Morgan | Maintain | Overweight | 2025-12-01 |
| Wells Fargo | Maintain | Overweight | 2025-10-16 |
| Susquehanna | Maintain | Positive | 2025-10-10 |
| JP Morgan | Maintain | Overweight | 2025-10-06 |
| UBS | Upgrade | Buy | 2025-09-05 |
| Wells Fargo | Maintain | Overweight | 2025-07-08 |
| Jefferies | Downgrade | Hold | 2025-06-26 |
| Barclays | Downgrade | Equal Weight | 2025-06-03 |
| Wells Fargo | Maintain | Overweight | 2025-04-17 |
ASML’s grades show a consistent pattern of maintained Overweight and Buy ratings, with a few downgrades earlier in the year, suggesting a generally positive but cautious outlook.
Grades Comparison of Applied Materials, Inc. and ASML Holding N.V.
Applied Materials and ASML have both received predominantly positive grades, but Applied Materials has slightly more upgrades and fewer downgrades recently. This difference might affect investor confidence, potentially making Applied Materials appear marginally more favored by analysts.
Target Prices
Here is the current analyst target price consensus for key semiconductor companies:
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Applied Materials, Inc. | 360 | 205 | 278.17 |
| ASML Holding N.V. | 1200 | 800 | 1045 |
Analysts expect Applied Materials shares to appreciate moderately above the current price of $256.41, while ASML’s consensus target suggests upside potential from $1056.02, indicating generally positive outlooks for both stocks.
Strengths and Weaknesses
Below is a comparison table highlighting the key strengths and weaknesses of Applied Materials, Inc. (AMAT) and ASML Holding N.V. (ASML) based on the most recent data:
| Criterion | Applied Materials, Inc. (AMAT) | ASML Holding N.V. (ASML) |
|---|---|---|
| Diversification | Broad product range: semiconductor systems, display tech, and services across multiple segments. | Focused on advanced lithography and semiconductor equipment, highly specialized niche. |
| Profitability | Net profit margin ~24.7%, strong operating margins around 29%. | Higher net profit margin ~26.8%, with EBIT margin around 32%. |
| Innovation | Strong in various semiconductor manufacturing technologies; ongoing investments in fab productivity. | Leading in extreme ultraviolet lithography, critical for advanced chip production. |
| Global presence | Extensive presence across US, Asia (China, Korea, Taiwan, Japan), and Europe. | Strong global footprint including Europe, Asia, and US, with headquarters in NL. |
| Market Share | Major player in semiconductor equipment; market cap ~$204B. | Market leader in lithography machines; market cap ~$409B, nearly double AMAT. |
| Debt level | Moderate debt to equity ~0.32, debt to assets ~18%, strong solvency (~45%). | Lower debt to equity ~0.27, debt to assets ~10%, but higher financial leverage (~2.63). |
Key takeaways: AMAT offers a more diversified product portfolio with solid profitability and manageable debt, making it less vulnerable to niche market shifts. ASML excels with superior margins and technological leadership in lithography but carries higher financial leverage and relies heavily on its specialized market. Both companies demonstrate robust global presence and innovation, suitable for investors seeking exposure to semiconductor equipment with different risk profiles.
Risk Analysis
Below is a comparative overview of key risks for Applied Materials, Inc. (AMAT) and ASML Holding N.V. (ASML) based on the most recent data available for 2025.
| Metric | Applied Materials, Inc. (AMAT) | ASML Holding N.V. (ASML) |
|---|---|---|
| Market Risk | High beta at 1.67 indicates higher volatility and sensitivity to market swings. | Moderate beta at 1.36 suggests somewhat lower market volatility risk. |
| Regulatory Risk | Exposure to regulations in US and Asia, especially China, impacting semiconductor equipment sales. | Significant regulatory scrutiny in EU and US, export controls affect advanced lithography sales. |
| Operational Risk | Complex manufacturing processes with 36K employees; supply chain disruptions could impact output. | Large workforce (43K) and advanced tech dependence increase operational complexity and risks. |
| Environmental Risk | Operates globally with some environmental compliance costs; moderate impact expected. | Strong environmental regulations in Europe may increase compliance costs. |
| Geopolitical Risk | High exposure to US-China tensions affecting supply chains and market access. | Sensitive to geopolitical tensions, especially US-China trade restrictions on tech exports. |
The most impactful risks for both companies are geopolitical and regulatory, given their global operations in sensitive semiconductor sectors. AMAT faces higher market volatility, while ASML contends with stricter export controls and EU regulations. Operational risks remain moderate due to complex manufacturing and supply chains.
Which Stock to Choose?
Applied Materials, Inc. (AMAT) shows a favorable income evolution with steady revenue and gross profit growth, strong profitability metrics including a 34.3% ROE, low debt levels, and a B+ rating indicating solid financial health but some valuation concerns.
ASML Holding N.V. (ASML) displays moderate income growth with some unfavorable trends in EBIT and EPS, robust profitability with a 41.0% ROE, low debt ratios, and an A- rating reflecting higher overall quality and financial strength despite mixed income statement signals.
Investors with a risk-tolerant profile or focused on quality might find ASML’s stronger rating and profitability appealing, while those valuing stable income evolution and favorable financial ratios could interpret AMAT as a viable option; the choice could depend on individual investment priorities.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Applied Materials, Inc. and ASML Holding N.V. to enhance your investment decisions:
