In the fast-evolving semiconductor industry, two companies stand out: ASML Holding N.V. and Onto Innovation Inc. Both play crucial roles in the semiconductor supply chain, yet they approach innovation with distinct strategies. ASML is renowned for its advanced lithography systems, while Onto specializes in process control tools and defect inspection technology. This article will analyze these two companies to identify which one presents a more compelling investment opportunity for savvy investors like you.
Table of contents
Company Overview
ASML Overview
ASML Holding N.V. is a leading developer and supplier of advanced semiconductor equipment systems, essential for chipmakers globally. Headquartered in Veldhoven, Netherlands, ASML specializes in lithography systems, including extreme ultraviolet (EUV) and deep ultraviolet (DUV) technologies, which are crucial for manufacturing cutting-edge semiconductors. With a market capitalization of approximately $389B, ASML is pivotal in the semiconductor industry, providing not only equipment but also metrology and inspection solutions that enhance yield and efficiency in chip production. Since its founding in 1984, ASML has established a strong presence across Asia, Europe, and the United States.
Onto Innovation Inc. Overview
Onto Innovation Inc., based in Wilmington, Massachusetts, focuses on process control tools for the semiconductor industry. Founded in 1940, the company designs and manufactures inspection and metrology systems, along with software for process management. With a market cap of around $6.7B, Onto Innovation serves various sectors, including advanced packaging and silicon wafer manufacturing. The company aims to enhance device performance and reliability through its innovative solutions, further solidifying its role in the technology sector.
Both ASML and Onto Innovation operate within the semiconductor industry, but their business models differ. ASML primarily focuses on high-end lithography systems, while Onto Innovation emphasizes process control tools and inspection systems. This distinction highlights ASML’s role as a leading equipment manufacturer and Onto’s focus on enhancing manufacturing processes.
Income Statement Comparison
The following table provides a comparison of key income statement metrics for ASML Holding N.V. and Onto Innovation Inc. for the most recent fiscal year.
| Metric | ASML | Onto |
|---|---|---|
| Revenue | 28.26B | 987.32M |
| EBITDA | 10.12B | 249.41M |
| EBIT | 9.21B | 187.10M |
| Net Income | 7.57B | 201.67M |
| EPS | 19.25 | 4.09 |
Interpretation of Income Statement
In the most recent fiscal year, ASML demonstrated robust growth, with revenues increasing to 28.26B, up from 27.56B the previous year, reflecting a strong demand for its advanced semiconductor equipment. Conversely, Onto recorded revenue growth, but at a slower pace, with 987.32M compared to 815.87M in the prior year. ASML’s net income also saw a healthy rise to 7.57B, indicating effective cost management and operational efficiency, while Onto’s net income of 201.67M highlighted its potential but showed a greater reliance on cost control measures. Overall, ASML’s strong margins and significant scale advantage suggest a lower risk profile compared to Onto, making it a potentially safer investment choice.
Financial Ratios Comparison
The following table presents a comparative analysis of key financial metrics for ASML Holding N.V. (ASML) and Onto Innovation Inc. (ONTO) based on the most recent fiscal data available.
| Metric | ASML | ONTO |
|---|---|---|
| ROE | 41% | 10% |
| ROIC | 25% | 9% |
| P/E | 35 | 62 |
| P/B | 14 | 4.3 |
| Current Ratio | 1.53 | 8.69 |
| Quick Ratio | 0.95 | 7.00 |
| D/E | 0.27 | 0.01 |
| Debt-to-Assets | 10% | 1% |
| Interest Coverage | 56 | N/A |
| Asset Turnover | 0.58 | 0.47 |
| Fixed Asset Turnover | 3.91 | 7.16 |
| Payout Ratio | 33% | 0% |
| Dividend Yield | 0.97% | 0% |
Interpretation of Financial Ratios
The data indicates that ASML exhibits a significantly higher return on equity (ROE) and return on invested capital (ROIC), suggesting strong profitability and efficient use of capital. However, its P/E and P/B ratios indicate a premium valuation compared to ONTO. ONTO demonstrates robust liquidity with exceptionally high current and quick ratios, but its lack of debt and dividend payout may reflect a conservative growth strategy. Investors should weigh ASML’s profitability against its valuation risk while considering ONTO’s stability and growth potential.
Dividend and Shareholder Returns
ASML pays dividends, with a recent annual yield of 0.97% and a payout ratio of approximately 33.8%. The company has a stable dividend per share trend, supported by healthy free cash flow. However, risks remain with potential unsustainable distributions if market conditions change.
In contrast, Onto Innovation does not issue dividends, focusing instead on reinvesting profits for growth. They have engaged in significant share buybacks, indicating a commitment to returning value to shareholders while prioritizing future expansion. This strategy could align with long-term shareholder value creation.
Strategic Positioning
ASML Holding N.V. holds a dominant position in the semiconductor equipment market, capturing approximately 80% of the advanced lithography segment. Its advanced extreme ultraviolet (EUV) technology faces competitive pressure from ONTO Innovation Inc., which specializes in process control tools and optical metrology. However, ASML’s robust R&D efforts and technological innovations mitigate risks from potential disruptions. ONTO, with a 1.7% market share, must navigate its competitive landscape carefully to maintain growth amidst increasing technological advancements.
Stock Comparison
In the past year, ASML Holding N.V. (ASML) and Onto Innovation Inc. (ONTO) have exhibited significant price movements that reflect their respective trading dynamics, showcasing a bullish sentiment overall.
Trend Analysis
For ASML, the percentage change over the past year is +42.64%. This positions ASML in a bullish trend, demonstrating acceleration with notable highs of 1,085.26 and lows of 605.55. The standard deviation of 125.55 suggests a considerable level of volatility in its price movements.
In the recent period from September 14, 2025, to November 30, 2025, ASML’s stock saw a percentage change of +23.27%, with a standard deviation of 64.32, indicating ongoing bullish momentum.
Conversely, Onto Innovation Inc. has experienced a modest percentage change of +0.59% over the past year. While this indicates a bullish trend, it is on the verge of neutrality. The stock reached highs of 233.14 and lows of 88.50, with a standard deviation of 42.36, reflecting lower volatility compared to ASML.
In the recent timeframe from September 14, 2025, to November 30, 2025, ONTO’s stock showed a percentage change of +23.44%, alongside a standard deviation of 8.61, which also supports its bullish trajectory.
Overall, both stocks are in a bullish trend, with ASML showing stronger gains and higher volatility compared to ONTO.
Analyst Opinions
Recent analyst recommendations for ASML Holding N.V. have been predominantly positive, with a consensus rating of B+. Analysts highlight strong return on equity (5) and return on assets (5) as key strengths, suggesting robust financial health. In contrast, Onto Innovation Inc. received a B rating, with a balanced assessment noting solid return on assets (4) but lower scores in debt-to-equity (1). The overall sentiment for both companies leans towards buy, indicating confidence in their growth potential for 2025.
Stock Grades
In this section, I will present the latest stock grades from reliable grading companies for ASML Holding N.V. and Onto Innovation Inc.
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 |
Onto Innovation Inc. Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| B. Riley Securities | maintain | Buy | 2025-11-18 |
| Needham | maintain | Buy | 2025-11-18 |
| Evercore ISI Group | maintain | Outperform | 2025-11-05 |
| Oppenheimer | maintain | Outperform | 2025-10-14 |
| Stifel | maintain | Hold | 2025-10-13 |
| B. Riley Securities | maintain | Buy | 2025-10-10 |
| Jefferies | upgrade | Buy | 2025-09-23 |
| B. Riley Securities | maintain | Buy | 2025-08-08 |
| Benchmark | maintain | Buy | 2025-08-08 |
| Cantor Fitzgerald | maintain | Neutral | 2025-06-24 |
Overall, both ASML and Onto Innovation maintain strong ratings from various grading companies, indicating a positive sentiment in the market. Notably, ASML has seen some downgrades, but firms like UBS and Raymond James still affirm its potential with “Buy” and “Strong Buy” ratings. Meanwhile, Onto Innovation consistently retains “Buy” ratings, reflecting a strong confidence among analysts.
Target Prices
The consensus target prices for ASML Holding N.V. and Onto Innovation Inc. provide valuable insight into analyst expectations.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| ASML Holding N.V. | 1200 | 800 | 1045 |
| Onto Innovation Inc. | 180 | 120 | 153.33 |
For ASML, the target consensus of 1045 is above its current price of 1003.22, suggesting potential upside. Similarly, Onto Innovation’s consensus of 153.33 exceeds its current price of 136.99, indicating favorable expectations from analysts.
Strengths and Weaknesses
The following table summarizes the strengths and weaknesses of ASML Holding N.V. and Onto Innovation Inc. based on the most recent data.
| Criterion | ASML Holding N.V. | Onto Innovation Inc. |
|---|---|---|
| Diversification | High | Moderate |
| Profitability | Strong (28.4% net margin) | Moderate (20.4% net margin) |
| Innovation | Leading (EUV technology) | Strong (Process control tools) |
| Global presence | Extensive | Moderate |
| Market Share | Largest in semiconductors | Growing in niche markets |
| Debt level | Low (10% debt to assets) | Very low (0.7% debt to assets) |
Key takeaways: ASML demonstrates superior profitability and innovation, supported by a strong global presence and low debt, making it a leader in the semiconductor industry. In contrast, Onto Innovation shows promise but operates in a more niche market with moderate profitability.
Risk Analysis
In this section, I present a comparative analysis of the risks associated with two prominent semiconductor companies: ASML Holding N.V. and Onto Innovation Inc.
| Metric | ASML | Onto Innovation |
|---|---|---|
| Market Risk | High (beta: 1.355) | Moderate (beta: 1.477) |
| Regulatory Risk | High (global regulations) | Moderate (industry norms) |
| Operational Risk | Moderate (supply chain) | Moderate (production issues) |
| Environmental Risk | Low (efforts in sustainability) | Moderate (waste management) |
| Geopolitical Risk | High (China relations) | Moderate (US-China tensions) |
In my analysis, the most significant risks for both companies are market and geopolitical risks. ASML faces pressures from global regulations and the ongoing geopolitical tensions related to its operations in China. Meanwhile, Onto Innovation also navigates similar geopolitical challenges but with a slightly lower regulatory burden. Both companies must manage operational risks associated with supply chain disruptions, which have become increasingly prevalent in the semiconductor industry.
Which one to choose?
When comparing ASML Holding N.V. (ASML) and Onto Innovation Inc. (ONTO), several key factors emerge. ASML shows a robust financial position with a market cap of approximately €263B and a solid revenue growth trajectory, reflected in a recent bullish stock trend with a 42.64% price change over the past year. ASML’s B+ rating indicates strong performance metrics, particularly in return on equity (5) and return on assets (5). In contrast, ONTO has a smaller market cap of around $8.4B, with a more modest growth rate and a B rating. While ONTO offers a favorable current ratio (8.69), its lower profitability ratios and slower revenue growth suggest limited short-term upside.
Investors focused on growth may prefer ASML, while those prioritizing stability and stronger cash management may favor ONTO. However, both companies face industry risks, including intense competition and supply chain vulnerabilities.
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 Onto Innovation Inc. to enhance your investment decisions:
