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ASML vs. LRCX: Which Semiconductor Equipment Stock Is the Better Buy?

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Key Takeaways

  • LRCX's AI-focused tools drove more than $1B in 2024 sales, with 2025 shipments expected to top $3B.
  • LRCX's non-GAAP operating margin hit 32.8% in Q3, with further improvement projected in Q4.
  • ASML's High-NA EUV tools lead the market, but China's export curbs remain a near-term risk.

ASML Holding (ASML - Free Report) and Lam Research (LRCX - Free Report) are both essential players in the semiconductor equipment industry. ASML leads in lithography technology, while LRCX focuses on etching and deposition systems, making them integral to the chipmaking process.

In simple terms, ASML prints the chip patterns on silicon wafers. After that, Lam Research comes in with tools to build out and refine the chip’s structure. That means they don’t compete, but they complement each other.

However, from an investment point of view, one stock offers more upside potential than the other right now. Let’s see which one is a better investment option for now.

ASML: Core Technology With Global Demand Amid Rising Risks

ASML Holding has a clear advantage in the chip equipment market. It is the only company capable of producing extreme ultraviolet (EUV) lithography machines at scale. These machines are needed to make chips at 5nm, 3nm and soon 2nm levels — key to powering artificial intelligence (AI) processors, mobile devices and data centers.

The company is already rolling out its next-generation High-NA EUV machines, which will be used for even smaller chips. As demand for faster and more efficient chips rises, especially with the growth of AI, ASML Holding stands to benefit. Its machines are a necessary part of the chip supply chain, and its customers, including TSMC, Intel and Samsung, will rely on ASML’s technology for years to come.

Financially, ASML Holding is performing well. In the first quarter of 2025, it reported revenue growth of 46% and a 93% jump in earnings per share. For the full year, it expects revenues to increase 15%, which shows continued demand, even in a challenging global environment.

ASML Holding N.V. Price, Consensus and EPS Surprise

ASML Holding N.V. Price, Consensus and EPS Surprise

ASML Holding N.V. price-consensus-eps-surprise-chart | ASML Holding N.V. Quote

However, one concern is the company’s exposure to China. In 2024, China made up 41% of ASML’s shipments. U.S. pressure on the Dutch government has led to export restrictions on some of ASML’s most advanced equipment, which could limit future sales in that market. Still, strong demand from other regions may offset that risk.

Lam Research: Targeted Execution With Margin Momentum

Lam Research is capitalizing on the AI trends. It builds the tools chipmakers need to manufacture next-generation semiconductors, including high-bandwidth memory and chips used in advanced packaging. These technologies are vital for powering AI and cloud data centers.

Lam Research’s products are not only critical but also innovative. For example, its ALTUS ALD tool uses molybdenum to improve speed and efficiency in chip production. Another product, the Aether platform, helps chipmakers achieve higher performance and density. These are essential capabilities as demand for advanced AI chips increases.

In 2024, Lam Research’s shipments for gate-all-around nodes and advanced packaging exceeded $1 billion, and management expects this figure to triple to more than $3 billion in 2025. Additionally, the industry’s migration to backside power distribution and dry-resist processing presents further growth opportunities for LRCX’s cutting-edge fabrication solutions.

These trends are aiding Lam Research’s financial performance. In the third quarter of fiscal 2025, the company reported revenues of $4.72 billion, up 24.5% year over year, and non-GAAP EPS of $1.04, highlighting a 33.3% increase (adjusting for stock split).

Lam Research Corporation Price, Consensus and EPS Surprise

Lam Research Corporation Price, Consensus and EPS Surprise

Lam Research Corporation price-consensus-eps-surprise-chart | Lam Research Corporation Quote

The most impressive was Lam Research’s margin performance. The non-GAAP gross margin expanded 150 basis points sequentially to 49% in the third quarter, and the company’s guidance of 49.5% in the fourth quarter reflects further expansion.

Similarly, the non-GAAP operating margin improved 210 basis points to 32.8%, and the fourth-quarter guidance indicates a further expansion of 70 basis points sequentially. Lam Research’s improving margins indicate that the company continues to manage supply-chain risks effectively, even amid geopolitical tensions and new tariff threats.

ASML vs. LRCX: Price Performance and Valuation

Year to date, shares of ASML Holding and Lam Research have risen 14.1% and 33.9%, respectively.

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Image Source: Zacks Investment Research

On the valuation front, ASML is trading at a forward earnings multiple of 27.34X, higher than LRCX’s 24.17X. While both companies are of high quality, Lam Research looks more reasonably priced, especially considering its stronger near-term momentum.

Zacks Investment Research
Image Source: Zacks Investment Research

Conclusion: LRCX Is the Better Buy for Now

Both ASML Holding and Lam Research are critical to the chipmaking process and have strong positions in the AI-driven semiconductor cycle. However, from an investment standpoint, Lam Research is currently the better pick. LRCX has better recent stock performance, improving margins, strong product demand and a lower valuation. While ASML is a long-term winner in lithography, the near-term upside and financial execution at Lam Research make it a more attractive investment choice right now.

LRCX carries a Zacks Rank #2 (Buy), making it a clear winner over ASML, which has a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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