AI-driven semiconductor expansion is intensifying competition between ASML and Applied Materials, two major suppliers of the equipment used to manufacture advanced chips. ASML specializes in lithography systems that print circuit patterns on wafers, while Applied Materials supplies equipment for deposition, etching, process control, thermal treatment, packaging and other manufacturing steps.
ASML’s latest results showed the strength of demand.
Applied Materials is pursuing a less concentrated strategy. The company said its semiconductor-equipment business was expected to grow by more than 30% in calendar 2026, citing demand from the global build-out of AI computing infrastructure.
The contrast creates two different investment cases. ASML has an unusually strong position in lithography, including roughly 90% of the overall market cited in the comparison, and its installed base generates recurring service and upgrade revenue. Applied Materials can combine several manufacturing processes for customers, potentially reducing equipment footprints and allowing it to expand its share across multiple equipment categories. Its broader portfolio also gives it more opportunities to cross-sell as chipmakers build new capacity.
The comparison places both stocks near 40 times expected earnings over the next 12 months. On 2028 estimates, ASML trades at about 23 times projected earnings and Applied Materials at about 21 times. The supplied analysis favors Applied Materials because its portfolio leaves more room for long-term share gains, while ASML’s dominant lithography position provides the stronger near-term exposure to a capacity-constrained AI-chip investment cycle.