ZACKS·2025-10-08 13:15Core Insights - ASML Holding and Texas Instruments play crucial but different roles in the semiconductor ecosystem, with ASML being the sole maker of EUV lithography machines and Texas Instruments focusing on analog and embedded chips [1][2] ASML Holding - ASML is considered the most important company in the semiconductor value chain due to its monopoly in EUV lithography, essential for manufacturing advanced chips used in AI and high-performance computing [3] - In Q2 2025, ASML reported a revenue growth of 23% and a 47% increase in earnings per share, but management expressed concerns about growth prospects for 2026 [4][5] - The company cannot confirm growth in 2026 due to customer hesitation and market uncertainty, influenced by ongoing U.S.-China tariff discussions [5][6] - Analysts predict a year-over-year revenue increase of 23.8% for 2025, but a decline of 0.9% for 2026, indicating uncertainty in future demand [7] - Earnings expectations show a projected growth of 35.6% in 2025 but only 0.7% in 2026, reflecting concerns about future demand [14] Texas Instruments - Texas Instruments specializes in analog and embedded chips, with growth opportunities in robotics, electric vehicles, and infrastructure automation [8] - The company aims to manufacture over 95% of its wafers internally by 2030, enhancing control over production and costs, and has received up to $1.6 billion in CHIPS Act funding [9] - In Q2 2025, Texas Instruments reported a revenue increase of 16% to $4.45 billion and a 15.6% rise in earnings per share to $1.41 [10][11] - Despite its strengths, Texas Instruments faces geopolitical risks, particularly in China, which accounted for about 20% of its 2024 revenues [12] - The automotive segment is recovering slowly, impacting overall growth prospects, with revenue growth estimates of 13% for 2025 and 8.7% for 2026 [13] Earnings Growth Trend - ASML's earnings are expected to rise significantly in 2025 but show minimal growth in 2026, while Texas Instruments has a more stable outlook with projected earnings growth of 7.7% in 2025 and 14.9% in 2026 [14][16] Price Performance and Valuation - Year-to-date, ASML shares have risen 45.2%, while Texas Instruments has declined by 5.4% [17] - ASML trades at a forward P/E of 35.29, a premium compared to Texas Instruments' 28.38, raising concerns about ASML's valuation given its uncertain growth outlook [19] Conclusion - Texas Instruments is positioned favorably with broader market exposure, consistent earnings growth, and strong support from U.S. manufacturing initiatives, giving it an edge over ASML, which faces growth visibility challenges beyond 2025 [22][23]