Better Artificial Intelligence Stock: ASML vs. Taiwan Semiconductor

Core Insights - The semiconductor industry is experiencing significant growth driven by the demand for advanced chips for artificial intelligence (AI) applications, with sales projected to reach $627 billion in 2024, a 19% year-over-year increase [4] - ASML and TSMC are critical players in this industry, with ASML providing essential lithography equipment and TSMC manufacturing advanced semiconductor chips [1][3] Group 1: ASML - ASML is the sole supplier of extreme ultraviolet (EUV) lithography equipment, which is crucial for producing the most advanced semiconductor chips [10][12] - Despite a 7% decline in share price in 2024, ASML expects long-term growth driven by AI, projecting revenue to rise to at least €44 billion ($45.8 billion) by 2030 [12][13] - The company anticipates 2024 sales to be around €28 billion ($29 billion), slightly higher than the previous year's €27.6 billion ($28.7 billion) [12][13] Group 2: TSMC - TSMC has mastered the production of 3nm chips, which are essential for AI and cloud computing, giving it a competitive edge [6] - TSMC's 3nm revenue represented 20% of its total sales of $23.5 billion in the third quarter, up from 6% the previous year, indicating rapid growth [15] - The company is well-positioned to capitalize on the AI industry's expansion, estimated to manufacture 95% of the world's advanced chips for AI [18] Group 3: Investment Considerations - TSMC's share price increased by 90% in 2024, and its lower price-to-earnings (P/E) ratio suggests it may be a better value compared to ASML [9][16] - Both ASML and TSMC have a symbiotic relationship, where TSMC's growth in chip sales may lead to increased equipment purchases from ASML [16]