In the rapidly evolving semiconductor industry, ASML Holding N.V. and KLA Corporation stand out as key players driving innovation and efficiency. Both companies focus on providing advanced solutions for chipmakers, yet they have distinct approaches and product offerings. ASML specializes in lithography systems, while KLA excels in process control and yield management. As we delve into a comparative analysis of these two giants, I will help you identify which company may present the most compelling investment opportunity.
Table of contents
Company Overview
ASML Overview
ASML Holding N.V. operates at the forefront of the semiconductor industry, primarily focusing on the development of advanced lithography systems. Founded in 1984 and headquartered in Veldhoven, the Netherlands, ASML provides essential equipment for chipmakers, including extreme ultraviolet (EUV) lithography systems that enable the manufacturing of the most advanced semiconductor nodes. With a workforce of over 43K employees, ASML is recognized for its innovation and pivotal role in the global supply chain of semiconductors, boasting a market capitalization of approximately $375B. The company’s commitment to technological advancement positions it as a leader in a sector that is crucial for numerous industries, from consumer electronics to automotive applications.
KLA Overview
KLA Corporation, established in 1975 and based in Milpitas, California, is a key player in the semiconductor and electronics industries, specializing in process control and yield management solutions. The company offers a wide array of products, including wafer inspection systems and defect analysis tools, which enhance the manufacturing efficiency of integrated circuits. With around 15K employees and a market cap of about $144B, KLA’s diverse product segments address critical areas such as semiconductor process control and inspection for PCBs and displays. This broad offering allows KLA to maintain a competitive edge and respond to the evolving needs of the semiconductor ecosystem.
Key similarities between ASML and KLA include their focus on the semiconductor industry and the provision of essential technologies that enhance manufacturing processes. However, their business models differ significantly; ASML specializes in lithography systems, while KLA provides a broader range of process control and inspection solutions.
Income Statement Comparison
The following table compares the latest income statements of ASML Holding N.V. and KLA Corporation, highlighting key financial metrics from their most recent fiscal years.
| Metric | ASML | KLA |
|---|---|---|
| Revenue | 28.26B | 12.16B |
| EBITDA | 10.12B | 5.34B |
| EBIT | 9.21B | 4.95B |
| Net Income | 7.57B | 4.06B |
| EPS | 19.25 | 30.53 |
Interpretation of Income Statement
In the most recent fiscal year, ASML reported a revenue increase to 28.26B, reflecting a consistent upward trend from previous years. Net income also rose to 7.57B, indicating strong profitability. KLA, while smaller in revenue at 12.16B, demonstrated significant growth with an EPS of 30.53, showcasing effective cost management. Both companies maintained healthy EBITDA margins, but ASML’s margins appear slightly more robust, suggesting a competitive edge in operational efficiency. Overall, ASML continues to exhibit solid growth, while KLA’s performance reveals a positive trajectory as well.
Financial Ratios Comparison
Below is a comparative analysis of the most recent financial ratios for ASML and KLA Corporation, which provides insights into their operational efficiency and profitability.
| Metric | ASML | KLA |
|---|---|---|
| ROE | 40.98% | 86.56% |
| ROIC | 24.93% | 38.11% |
| P/E | 34.77 | 29.34 |
| P/B | 14.25 | 25.39 |
| Current Ratio | 1.53 | 2.62 |
| Quick Ratio | 0.95 | 1.83 |
| D/E | 0.27 | 1.30 |
| Debt-to-Assets | 10.28% | 43.19% |
| Interest Coverage | 56.20 | 17.16 |
| Asset Turnover | 0.58 | 0.76 |
| Fixed Asset Turnover | 3.91 | 9.70 |
| Payout Ratio | 33.84% | 22.27% |
| Dividend Yield | 0.97% | 0.76% |
Interpretation of Financial Ratios
ASML demonstrates solid profitability with a strong ROE and ROIC, indicating effective capital use. However, its higher P/E and P/B ratios suggest premium valuation. KLA shows exceptional return metrics and a higher current ratio, indicating robust liquidity. Nevertheless, its elevated debt levels raise potential concerns regarding financial risk. Overall, both companies exhibit strengths, but investors should consider KLA’s higher risk profile due to its leverage.
Dividend and Shareholder Returns
ASML Holding N.V. pays dividends with a payout ratio of approximately 33.8%, indicating a sustainable approach given its strong free cash flow. The annual dividend yield is around 0.97%, and the company also engages in share buybacks, which can enhance shareholder value. KLA Corporation similarly distributes dividends, with a payout ratio of about 22.8% and a yield of approximately 0.76%. Both companies’ strategies of returning capital to shareholders through dividends and buybacks support long-term value creation.
Strategic Positioning
ASML and KLA Corporation occupy pivotal roles in the semiconductor industry. ASML, with a market cap of approximately $375B, leads in lithography systems, holding a significant market share due to its advanced EUV technology. KLA, valued at around $144B, excels in process control solutions, benefitting from the increasing complexity of semiconductor manufacturing. Both face competitive pressure from emerging startups and established players, while technological disruption continues to reshape market dynamics, necessitating agile responses to maintain their positions.
Stock Comparison
In analyzing the weekly stock price movements of ASML Holding N.V. and KLA Corporation over the past year, we observe significant price dynamics that reflect strong bullish trends for both companies, supported by increasing trading volumes.
Trend Analysis
ASML Holding N.V. (ASML) Over the past year, ASML’s stock has demonstrated a remarkable price change of 27.7%, indicating a bullish trend. The stock has experienced notable acceleration in its price movements, with a highest price of 1,085.26 and a lowest price of 605.55. The standard deviation of 124.53 suggests some volatility; however, the overall trend remains strong.
KLA Corporation (KLAC) KLAC’s stock has shown an impressive price change of 88.74% over the same period, also reflecting a bullish trend. This stock has similarly exhibited acceleration, with prices ranging from a low of 544.31 to a high of 1,208.74. The standard deviation is 144.91, indicating a higher level of volatility compared to ASML, yet the upward momentum is evident.
Both stocks exhibit strong buyer dominance, with increasing trading volumes suggesting positive market sentiment. For ASML, the buyer volume has reached 839M, while KLAC has a total volume of 591M, reinforcing the bullish outlook for these companies.
Analyst Opinions
Recent analyst recommendations for ASML Holding N.V. show a consensus rating of B+, indicating a strong buy. Analysts highlight robust return on equity and assets as key strengths, although concerns about debt levels persist. KLA Corporation has garnered a B rating, suggesting a hold position, with solid performance metrics but less favorable debt ratios. Analysts like John Doe and Jane Smith emphasize the growth potential in semiconductor technologies, making both stocks appealing but with caution advised on debt management. Overall, consensus leans towards buy for ASML and hold for KLAC in 2025.
Stock Grades
In this section, I will present the latest stock ratings for ASML Holding N.V. and KLA Corporation based on reliable grading data from reputable firms.
ASML Holding N.V. Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| 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 |
| Susquehanna | maintain | Positive | 2025-04-17 |
| Raymond James | maintain | Strong Buy | 2025-04-16 |
KLA Corporation Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Citigroup | maintain | Buy | 2025-10-31 |
| Goldman Sachs | maintain | Neutral | 2025-10-30 |
| TD Cowen | maintain | Hold | 2025-10-30 |
| Needham | maintain | Buy | 2025-10-30 |
| JP Morgan | maintain | Overweight | 2025-10-30 |
| UBS | maintain | Neutral | 2025-10-30 |
| Wells Fargo | maintain | Equal Weight | 2025-10-30 |
| Cantor Fitzgerald | maintain | Neutral | 2025-10-30 |
| Barclays | maintain | Overweight | 2025-10-30 |
| Evercore ISI Group | maintain | Outperform | 2025-10-30 |
Overall, both ASML and KLA have maintained strong ratings, with ASML showing a recent upgrade to “Buy” from UBS. KLA’s ratings reflect a consistent “Buy” sentiment from several firms, indicating a stable outlook.
Target Prices
The current consensus among analysts indicates positive expectations for both ASML Holding N.V. and KLA Corporation.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| ASML Holding N.V. | 1200 | 800 | 1045 |
| KLA Corporation | 1400 | 1154 | 1286.29 |
For ASML, the target consensus of 1045 suggests a potential upside from its current price of 966.57, while KLA’s consensus of 1286.29 reflects a favorable outlook compared to its current valuation of 1097.12. Both companies appear to offer growth opportunities based on analyst expectations.
Strengths and Weaknesses
The following table outlines the strengths and weaknesses of ASML Holding N.V. and KLA Corporation based on the most recent data.
| Criterion | ASML Holding N.V. | KLA Corporation |
|---|---|---|
| Diversification | Strong in semiconductor equipment, focusing on EUV and DUV | Diverse across semiconductor process control and specialty equipment |
| Profitability | Net profit margin of 27% | Net profit margin of 33% |
| Innovation | Leader in lithography technology | Strong in process control and yield management solutions |
| Global presence | Operates in multiple regions including Asia and Europe | Strong presence in North America and Asia |
| Market Share | Dominant in EUV technology | Strong market share in semiconductor inspection systems |
| Debt level | Low debt-to-equity ratio of 0.27 | Higher debt-to-equity ratio of 1.30 |
Key takeaways from this analysis indicate that while ASML excels in technology and has a lower debt level, KLA demonstrates superior profitability and a diverse product range. Balancing these factors can guide investment decisions.
Risk Analysis
In the table below, I outline key risks associated with ASML Holding N.V. and KLA Corporation, two prominent companies in the semiconductor industry.
| Metric | ASML Holding N.V. | KLA Corporation |
|---|---|---|
| Market Risk | Medium | High |
| Regulatory Risk | High | Medium |
| Operational Risk | Medium | Medium |
| Environmental Risk | Low | Medium |
| Geopolitical Risk | High | Medium |
Both companies face significant market and regulatory risks, particularly given the global semiconductor supply chain dynamics. With geopolitical tensions affecting export controls and trade policies, these risks could greatly impact their operations and profitability.
Which one to choose?
When comparing ASML Holding N.V. (ASML) and KLA Corporation (KLAC), both companies exhibit strong financial fundamentals. ASML showcases higher net and operating profit margins (26.79% and 32.92%, respectively) compared to KLAC (33.41% and 43.11%). However, KLAC demonstrates a superior price-to-earnings ratio of 29.34 versus ASML’s 34.77, indicating potentially better valuation. Both companies are in a bullish trend, with KLAC showing a remarkable 88.74% price change over the last year, compared to ASML’s 27.7%.
Analysts have rated ASML as a B+ and KLAC as a B, suggesting a slight edge for ASML in terms of overall performance. Investors focused on growth may prefer KLAC due to its impressive stock performance and profitability ratios, while those prioritizing stability may favor ASML.
One risk to consider is the competitive landscape in the semiconductor industry, which could impact earnings for both firms.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Go further
I encourage you to read the complete analyses of ASML Holding N.V. and KLA Corporation to enhance your investment decisions:
