Which Semiconductor Equipment Stock Has More Upside in 2026?

As earnings season picks up for semiconductor stocks, investors will want to assess which companies might be best positioned for a bump. Outside of the biggest players like NVIDIA Corp. (NASDAQ: NVDA) and TSMC (NYSE: TSM), the field is crowded with players across market capitalizations. Among the companies below the $1 trillion threshold, three stand out for stellar growth in recent years—ASML Holding N.V. (NASDAQ: ASML), Applied Materials Inc. (NASDAQ: AMAT), and Lam Research Corp. (NASDAQ: LRCX). A comparison of these firms may help investors determine which could be a standout in the new year.

ASML's Dominance in Lithography Is Unquestioned, But How Much Will It Return?

Despite being one of the larger companies in the chipmaking space, ASML does not actually build chips itself, but rather photolithography tools other firms use to build semiconductor products. It stands out for being a non-U.S. semiconductor stock at a time when tariff and trade uncertainty remains elevated. The company has also performed very well in the last year, with shares rising by 80% in that time.

ASML is likely positioned to continue to dominate in 2026 thanks to its key lithography products, which remain vital to a host of other chipmaking companies. In addition to preeminence in this important step of the manufacturing process, ASML is also continuing to develop its offerings.

One offering, the company's high-NA extreme ultraviolet (EUV) machine, is its most advanced lithography tool to date. In the next two years, the company hopes to scale production of these machines. ASML has cornered an essential part of the semiconductor manufacturing market and has a huge (and growing) technological advantage over essentially all of its competitors.

One of the few concerns investors may have is in the company's near-term upside potential—analysts are calling for just 2% in this area. Still, despite a major rally, ASML's price-to-earnings ratio is 55.4, much lower than the sector-wide average of 78.5.

Applied Materials' Revenue and Chinese Market Headwinds Linger

Like ASML, Applied Materials provides equipment and software necessary for the manufacturing of semiconductor chips and does not fabricate chips itself. However, unlike ASML, this company does not have a niche specialization that can guarantee its essential status to other firms in the space. That's not to say AMAT isn't in a strong position, though, as growing demand for memory products amid limited supply could help accelerate growth in the quarters to come. 

A key consideration for investors is this firm's revenue performance. In the last reported earnings period, Applied Materials saw revenue decline by 3.5% year-over-year (YOY) at a time when many others in the industry posted significant growth.

A driving factor in AMAT's mediocre revenue performance is its exposure to the Chinese market, which has faced headwinds related to trade restrictions. These problems are likely to persist for now. Still, Applied Materials has recently launched a new product that could help it gain dominance in advanced packaging of AI chips, and 22 out of 33 analysts call AMAT a Buy.

But after rising by almost 65% over the last 12 months, these same analysts predict that AMAT's share price will contract, with downside potential of about 11%.

Lam Research Benefits From Recurring Revenue, But Can the Recent Rally Continue?

Lam Research provides water fabrication equipment used to manufacture semiconductor products, with tools that have become increasingly vital as AI chip demands have grown more complex.

Thanks to the nature of its equipment, Lam Research stands out from its peers for its high-margin recurring revenue. This helps insulate the company against cyclical slowdowns, though such slowdowns are unlikely in the near term anyway, given strong demand for AI.

Lam recently reported $5.3 billion in revenue, up nearly 28% YOY, for the last quarter. As clients upgrade to the latest versions of Lam's products, it should keep seeing conversion-based sales growth. One issue investors may encounter with Lam Research is that its recent growth—an impressive 168% in 2025—may have been too much, too fast.

Analysts now expect shares to cool somewhat, with a 12% decline forecasted despite generally strong Buy signals.

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