ASML vs. TXN: Which Semiconductor Stock Is the Better Buy Now?

ASML Holding ASML and Texas Instruments TXN are two important players in the semiconductor industry. ASML makes advanced machines that are used to manufacture chips, while Texas Instruments designs and sells analog and embedded chips that go into many everyday electronics.

These companies serve different parts of the chip supply chain, but both are key to the global semiconductor market. However, from an investment point of view, one stock offers a more favorable outlook than the other right now. Let’s see which one is a better investment option for now.

ASML: Critical Technology and Strong Growth

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 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.

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.

TXN: A Steady Business but Slower Recovery

Texas Instruments takes a very different approach. It focuses on analog and embedded chips, which are essential but not high-growth. These chips are widely used in industrial systems, cars and consumer electronics. Its biggest strength lies in its deep exposure to the industrial and automotive markets, which together made up 70% of first-quarter 2025 revenues.

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. In the first quarter, industrial revenues grew at an upper-single-digit pace, while automotive continued to recover, growing modestly. With customer inventory levels still low, Texas Instruments sees room for more improvement in the coming quarters.

However, the personal electronics segment remains a drag. Revenues in this segment fell by mid-teens sequentially in the first quarter, driven by weak consumer demand, excess inventory and typical seasonal slowdowns. Management doesn’t expect a quick recovery here, citing ongoing caution among customers.

On the financial front, Texas Instruments’ 11% revenue growth and 6.7% rise in EPS are respectable, but they lag significantly behind ASML’s pace. While the business is stable and profitable, it lacks a strong growth engine in the near term.

How Do Estimates Compare for ASML & TXN?

The Zacks Consensus Estimate for ASML Holding’s 2025 sales and EPS implies year-over-year growth of 21.5% and 30.5%, respectively.

The Zacks Consensus Estimate for Texas Instruments’ 2025 sales and EPS calls for a year-over-year increase of 10.6% and 6.7%, respectively, much slower than ASML.

ASML vs. TXN: Price Performance and Valuation

Year to date, ASML Holding shares have jumped 7.7%, higher than the 0.5% rise in Texas Instruments shares.

On the valuation front, ASML looks more attractive than TXN. ASML Holding trades at a forward 12-month P/E multiple of 26.10X, lower than the three-year median of 29.82X. On the contrary, Texas Instruments trades at a P/E multiple of 32.14X, above ASML as well as the three-year median of 23.91X. For a company with slower growth and more near-term uncertainty, that premium is hard to justify.

Conclusion: Buy ASML Stock for Now

While both ASML Holding and Texas Instruments play important roles in the chip industry, ASML stands out as the better stock to own right now. Its unique position in EUV and High-NA lithography, strong earnings growth and more favorable valuation give it a clear edge. With AI and advanced chip demand accelerating, ASML looks well-positioned to deliver long-term value, making it the more compelling buy between the two.

ASML Holding carries a Zacks Rank #2 (Buy), making it a clear winner over Texas Instruments, 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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This article originally published on Zacks Investment Research (zacks.com).

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