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ASML Holding vs. Texas Instruments: Which Semi Stock Has an Edge?
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Key Takeaways
ASML posted 23% revenue growth in Q2 but warned of slower demand and uncertainty beyond 2025.
Texas Instruments gained 16% revenue and 15.6% EPS growth in Q2, backed by U.S. manufacturing plans.
TXN's internal production drive and CHIPS Act funding boost its stability versus ASML's volatile outlook.
ASML Holding (ASML - Free Report) and Texas Instruments (TXN - Free Report) play crucial but very different roles in the semiconductor ecosystem. ASML is the sole maker of extreme-ultraviolet (EUV) lithography machines, which are vital tools used to produce the world’s most advanced chips. Meanwhile, Texas Instruments designs analog and embedded chips that power countless devices, from cars and industrial machines to consumer electronics.
Both companies are essential to the global chip supply chain, but they thrive in different corners of the market. With the semiconductor sector continuing to evolve rapidly, investors are wondering which stock has stronger upside potential. Let’s examine their fundamentals, growth drivers, challenges and valuations to see which offers a better long-term opportunity.
The Case for ASML Holding
ASML Holding is widely regarded as the most important company in the global semiconductor value chain due to its monopoly in EUV lithography. This cutting-edge technology is essential for manufacturing the smallest and most advanced chips used in AI accelerators, high-performance computing and smartphones. Demand for EUV systems remains robust, with top customers like Taiwan Semiconductor Manufacturing, Samsung and Intel investing heavily in advanced node development.
Financially, ASML Holding is performing well. In the second quarter of 2025, it reported revenue growth of 23% and a 47% jump in earnings per share. Despite strong quarterly results, management’s commentary about next year’s forecasts raises concerns about its growth prospects.
On the second-quarter earnings call, management backed away from earlier confidence about growth in 2026. Previously, ASML Holding had expected demand to keep rising, especially with AI fueling more chip production. However, on the second-quarter call, the company said that it “cannot confirm growth in 2026,” pointing to customer hesitation and ongoing market uncertainty.
During the call, ASML Holding acknowledged that ongoing U.S.-China tariff discussions, including the Section 232 tariff review, are negatively impacting customer capital spending timelines. This hesitation may delay orders and revenue recognition in late 2025 and into 2026, casting doubt on near-term growth continuity.
Analysts are also pessimistic about the company’s prospects in 2026, as reflected by the Zacks Consensus Estimate. The consensus mark for 2025 revenues indicates a year-over-year increase of 23.8%, while that for 2026 implies a decline of 0.9%.
The Case for Texas Instruments
Texas Instruments focuses on analog and embedded chips. These chips are widely used in industrial systems, cars and consumer electronics. The company sees long-term growth opportunities in areas like robotics, electric vehicles and infrastructure automation. Its embedded processors and analog chips are key components in these systems.
To maintain its dominance across industries, TXN is prioritizing chip manufacturing within its internal manufacturing facilities instead of relying on outside foundries. The company aims to manufacture more than 95% of its wafers internally by 2030. By building its internal manufacturing, the company will gain better control over production, quality and costs. Texas Instruments has been awarded up to $1.6 billion in CHIPS Act funding, with total benefits from the program expected to reach $7.5 billion to $9.5 billion over its lifetime.
Financially, the company is performing well. In the second quarter of 2025, Texas Instruments’ revenues soared 16% year over year to $4.45 billion, while non-GAAP EPS jumped 15.6% to $1.41.
Despite its strength, Texas Instruments is encountering some challenges. The company faces significant exposure to geopolitical risks, particularly in China, which accounted for approximately 20% of its 2024 revenues. While the company reported growth in China during the second quarter, rising geopolitical tensions and potential trade restrictions could impact future performance.
Furthermore, slow recovery across the automotive end market might hurt Texas Instruments’ overall growth prospects. Its automotive segment is recovering slowly compared to other markets. The Zacks Consensus Estimate for TXN’s 2025 and 2026 revenues indicates year-over-year growth of 13% and 8.7%, respectively.
ASML vs. TXN: Earnings Growth Trend
Earnings expectations highlight the contrast between these two companies. For ASML Holding, the Zacks Consensus Estimate implies earnings rising 35.6% in 2025 but nearly flattening with just 0.7% growth in 2026, indicating uncertainty around future demand.
ASML Earnings Growth Outlook
Image Source: Zacks Investment Research
Texas Instruments, in contrast, shows a more stable outlook. Its earnings per share are projected to grow 7.7% in 2025 and 14.9% in 2026, reflecting steady and sustainable performance, driven by strong operational discipline and resilient demand across markets.
TXN Earnings Growth Outlook
Image Source: Zacks Investment Research
ASML vs. TXN: Price Performance and Valuation
Year to date, shares of ASML Holding have risen 45.2%, while Texas Instruments declined 5.4%.
YTD Price Return Performance
Image Source: Zacks Investment Research
ASML’s rally reflects investor excitement about AI-related chip demand, but it also makes the stock more expensive. At a forward 12-month price-to-earnings (P/E) of 35.29, ASML Holding trades at a rich premium to Texas Instruments’ 28.38 multiple. Considering ASML’s uncertain growth outlook for 2026, that valuation looks stretched. Meanwhile, TXN offers a more balanced risk-reward profile at a more reasonable valuation.
Forward 12-Month P/E Multiple
Image Source: Zacks Investment Research
Conclusion: TXN Has an Edge Over ASML
While ASML dominates a critical niche in chip manufacturing, its growth visibility beyond 2025 looks cloudy amid customer caution and trade-related risks. On the contrary, Texas Instruments benefits from broader end-market exposure, consistent earnings growth and strong support from U.S. manufacturing initiatives.
TXN’s internal production strategy and CHIPS Act funding enhance its long-term competitiveness and cost efficiency. Its stable earnings outlook and attractive valuation give it a clear edge over ASML Holding.
Image: Bigstock
ASML Holding vs. Texas Instruments: Which Semi Stock Has an Edge?
Key Takeaways
ASML Holding (ASML - Free Report) and Texas Instruments (TXN - Free Report) play crucial but very different roles in the semiconductor ecosystem. ASML is the sole maker of extreme-ultraviolet (EUV) lithography machines, which are vital tools used to produce the world’s most advanced chips. Meanwhile, Texas Instruments designs analog and embedded chips that power countless devices, from cars and industrial machines to consumer electronics.
Both companies are essential to the global chip supply chain, but they thrive in different corners of the market. With the semiconductor sector continuing to evolve rapidly, investors are wondering which stock has stronger upside potential. Let’s examine their fundamentals, growth drivers, challenges and valuations to see which offers a better long-term opportunity.
The Case for ASML Holding
ASML Holding is widely regarded as the most important company in the global semiconductor value chain due to its monopoly in EUV lithography. This cutting-edge technology is essential for manufacturing the smallest and most advanced chips used in AI accelerators, high-performance computing and smartphones. Demand for EUV systems remains robust, with top customers like Taiwan Semiconductor Manufacturing, Samsung and Intel investing heavily in advanced node development.
Financially, ASML Holding is performing well. In the second quarter of 2025, it reported revenue growth of 23% and a 47% jump in earnings per share. Despite strong quarterly results, management’s commentary about next year’s forecasts raises concerns about its growth prospects.
On the second-quarter earnings call, management backed away from earlier confidence about growth in 2026. Previously, ASML Holding had expected demand to keep rising, especially with AI fueling more chip production. However, on the second-quarter call, the company said that it “cannot confirm growth in 2026,” pointing to customer hesitation and ongoing market uncertainty.
During the call, ASML Holding acknowledged that ongoing U.S.-China tariff discussions, including the Section 232 tariff review, are negatively impacting customer capital spending timelines. This hesitation may delay orders and revenue recognition in late 2025 and into 2026, casting doubt on near-term growth continuity.
Analysts are also pessimistic about the company’s prospects in 2026, as reflected by the Zacks Consensus Estimate. The consensus mark for 2025 revenues indicates a year-over-year increase of 23.8%, while that for 2026 implies a decline of 0.9%.
The Case for Texas Instruments
Texas Instruments focuses on analog and embedded chips. These chips are widely used in industrial systems, cars and consumer electronics. The company sees long-term growth opportunities in areas like robotics, electric vehicles and infrastructure automation. Its embedded processors and analog chips are key components in these systems.
To maintain its dominance across industries, TXN is prioritizing chip manufacturing within its internal manufacturing facilities instead of relying on outside foundries. The company aims to manufacture more than 95% of its wafers internally by 2030. By building its internal manufacturing, the company will gain better control over production, quality and costs. Texas Instruments has been awarded up to $1.6 billion in CHIPS Act funding, with total benefits from the program expected to reach $7.5 billion to $9.5 billion over its lifetime.
Financially, the company is performing well. In the second quarter of 2025, Texas Instruments’ revenues soared 16% year over year to $4.45 billion, while non-GAAP EPS jumped 15.6% to $1.41.
Despite its strength, Texas Instruments is encountering some challenges. The company faces significant exposure to geopolitical risks, particularly in China, which accounted for approximately 20% of its 2024 revenues. While the company reported growth in China during the second quarter, rising geopolitical tensions and potential trade restrictions could impact future performance.
Furthermore, slow recovery across the automotive end market might hurt Texas Instruments’ overall growth prospects. Its automotive segment is recovering slowly compared to other markets. The Zacks Consensus Estimate for TXN’s 2025 and 2026 revenues indicates year-over-year growth of 13% and 8.7%, respectively.
ASML vs. TXN: Earnings Growth Trend
Earnings expectations highlight the contrast between these two companies. For ASML Holding, the Zacks Consensus Estimate implies earnings rising 35.6% in 2025 but nearly flattening with just 0.7% growth in 2026, indicating uncertainty around future demand.
ASML Earnings Growth Outlook
Image Source: Zacks Investment Research
Texas Instruments, in contrast, shows a more stable outlook. Its earnings per share are projected to grow 7.7% in 2025 and 14.9% in 2026, reflecting steady and sustainable performance, driven by strong operational discipline and resilient demand across markets.
TXN Earnings Growth Outlook
Image Source: Zacks Investment Research
ASML vs. TXN: Price Performance and Valuation
Year to date, shares of ASML Holding have risen 45.2%, while Texas Instruments declined 5.4%.
YTD Price Return Performance
Image Source: Zacks Investment Research
ASML’s rally reflects investor excitement about AI-related chip demand, but it also makes the stock more expensive. At a forward 12-month price-to-earnings (P/E) of 35.29, ASML Holding trades at a rich premium to Texas Instruments’ 28.38 multiple. Considering ASML’s uncertain growth outlook for 2026, that valuation looks stretched. Meanwhile, TXN offers a more balanced risk-reward profile at a more reasonable valuation.
Forward 12-Month P/E Multiple
Image Source: Zacks Investment Research
Conclusion: TXN Has an Edge Over ASML
While ASML dominates a critical niche in chip manufacturing, its growth visibility beyond 2025 looks cloudy amid customer caution and trade-related risks. On the contrary, Texas Instruments benefits from broader end-market exposure, consistent earnings growth and strong support from U.S. manufacturing initiatives.
TXN’s internal production strategy and CHIPS Act funding enhance its long-term competitiveness and cost efficiency. Its stable earnings outlook and attractive valuation give it a clear edge over ASML Holding.
Currently, ASML Holding and Texas Instruments both carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.