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Applied Materials vs. ASML Holding: Which Semiconductor Stock is a Better Buy?

Stock MarketsApr 08, 2021 01:30PM ET
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© Reuters. Applied Materials vs. ASML Holding: Which Semiconductor Stock is a Better Buy?

Due to increasing demand for semiconductors for advanced technologies and devices and robust and growing demand from the automobile sector, the semiconductor industry is poised for decade-long growth. Of course, concerns related to a current semiconductor supply shortage must first be addressed by the industry. As such, we think semiconductor manufacturers Applied Materials (NASDAQ:AMAT) and ASML Holding (NASDAQ:ASML) are well positioned to capitalize on industry tailwinds and generate hefty returns. But let’s find out which of these names is a better buy now.Applied Materials, Inc. (AMAT) and ASML Holding N.V. (ASML) are two leading semiconductor equipment producers that operate internationally. AMAT operates through Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets segments. ASML offers computational lithography and software solutions, inspection related systems for memory and logic chipmakers, and other associated services.

The mainstream adoption of Internet of Things (IoT) and the rapid deployment of 5G technology for improved internet experiences, as well as the increasing semiconductor needs by the automotive sector, have turbo charged the growth of the semiconductor market. In fact, working-from-home arrangements and a growing dependency on cloud services amid the COVID-19 pandemic are likely to have an enduring impact on consumer electronics, which in turn will boost the demand for semiconductors. Because a global microchip shortage is expected to continue through 2021, we think semiconductor manufacturers AMAT and ASML are in a great position to witness substantial demand across their entire product portfolios and deliver robust returns.

While AMAT returned 129.6% over the past year, ASML gained 129.9%. In terms of past six-month performance, AMAT is the clear winner with 127.7% gains versus ASML’s 66.7%. But which of these stocks is a better pick now? Let’s find out.

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Applied Materials vs. ASML Holding: Which Semiconductor Stock is a Better Buy?
 

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