ASML vs. Applied Materials: Which Chip-Equipment Stock Is the Better Buy?
2026-10-15 10:15
•Adam Levy •The Motley Fool
••••• ••• Axe Cap view
AMAT vs ASML: Chip-Equipment Showdown
Applied Materials’ diversified offering edges out ASML for longer-term growth despite ASML’s lithography dominance.
The chip-equipment race is heating up as AI drives semiconductor demand. ASML owns almost 90% of lithography, critical for advanced chips, which means it commands premium prices and strong near-term profits. But its growth is capped by limited market share expansion. Applied Materials (AMAT) covers a broader range of manufacturing gear and can gain ground through integrated technology solutions, positioning it for sustained growth beyond the current investment wave. While both trade rich, AMAT’s 2028 earnings multiple of 21x vs ASML’s 23x looks more appealing if you believe in longer-term secular growth. South Africa doesn’t have a direct semiconductor play, so tracking USD/ZAR alongside tech sector moves makes sense—strengthening rand could boost local investors’ global tech buying power. The wildcard is a tech slowdown; a cooling AI boom or supply bottlenecks could hit all chip-equipment players. this is just our opinion and not financial advice
Prefer setting a watch on AMAT for a buy on dips; ASML is solid but pricey. Use USD/ZAR as a local hedge on global tech momentum.
- Applied Materials (AMAT)
- ASML
- USD/ZAR
- AI demand slowdown
- supply chain disruptions
6/10
With semiconductor manufacturers expanding production capacity to meet AI chip demand, both ASML and Applied Materials are positioned for strong growth. ASML dominates lithography equipment with ~90% market share and premium pricing power, while Applied Materials offers a diversified portfolio with opportunities to gain market share through integrated solutions. Despite similar forward P/E ratios around 40x, Applied Materials appears the better long-term buy, trading at 21x 2028 earnings versus ASML's 23x, given its potential for sustained higher growth rates post-investment cycle.
Our take is based on reporting first published by The Motley Fool.