Core Insights - ASML Holding's sales to China represented 27% of total revenues in Q1 2025, exceeding previous expectations of low-20% levels, driven by strong demand for DUV lithography systems used in mature-node chip manufacturing [1][9] - EUV system exports to China remain restricted due to U.S. and Dutch export controls, aimed at preventing China from producing advanced chips [2][9] - Despite the trade tensions, ASML has not observed any changes in customer behavior or order cancellations, although the management acknowledged increasing uncertainty in the trade environment [3][4][9] Company Performance - ASML's share price has increased approximately 15.4% year-to-date, outperforming the Zacks Computer and Technology sector, which gained 7% [8] - The forward price-to-sales ratio for ASML is 8.23, significantly higher than the sector average of 6.57 [10] - The Zacks Consensus Estimate indicates a year-over-year earnings increase of about 32% for 2025 and 10.1% for 2026, with recent upward revisions for 2025 estimates [11]

Core Viewpoint - ASML Holding and Applied Materials are key players in the semiconductor supply chain, with ASML holding a dominant position in EUV lithography and Applied Materials providing a broad range of semiconductor fabrication equipment [1][2]. Group 1: ASML Holding - ASML Holding has a near-monopoly on extreme ultraviolet (EUV) lithography, crucial for producing advanced semiconductors [3][4]. - The company is investing in next-generation technologies like High-NA EUV, which are essential for smaller semiconductor nodes [5]. - In Q4 2024, ASML reported a 24% increase in revenues and a 30% increase in earnings year-over-year, with a record backlog of €36 billion indicating strong future revenue visibility [6]. - ASML's revenue growth guidance for Q1 2025 is 46.5%, and for the full year 2025, it is 15% [6]. - Geopolitical risks, particularly export restrictions to China, pose challenges, as China accounted for approximately 41% of ASML's lithography shipments in 2024 [7]. Group 2: Applied Materials - Applied Materials is the largest supplier of semiconductor fabrication equipment, with a strong position in AI-driven semiconductor technology [8]. - In fiscal 2024, revenues from advanced semiconductor nodes exceeded $2.5 billion, with expectations to double in fiscal 2025 [9]. - In Q1 fiscal 2025, Applied Materials reported a 7% increase in revenues and a 12% increase in non-GAAP EPS [9]. - The company faces challenges from U.S. export restrictions to China, which are expected to reduce fiscal 2025 revenues by $400 million [10]. - A slowdown in the ICAPS segment could negatively impact Applied Materials' overall performance [11]. Group 3: Price Performance and Valuation - Year-to-date, ASML shares have decreased by 10.1%, while Applied Materials shares have declined by 16.7% [13]. - ASML is trading at a forward earnings multiple of 23.56X, below its three-year median of 30.04X, while Applied Materials has a forward sales multiple of 14.13X, significantly lower than its median of 18.14X [14]. - ASML's valuations reflect high growth expectations and improving profitability, suggesting that its premium may be justified if execution is sustained [15]. Group 4: Estimates Comparison - The Zacks Consensus Estimate for ASML's 2025 sales and EPS implies year-over-year growth of 12.4% and 21.9%, respectively [18]. - For Applied Materials, the estimates for fiscal 2025 sales and EPS imply a year-over-year increase of 6% and 8.2%, respectively, with recent downward revisions [20]. Conclusion - ASML Holding has a stronger growth profile and a monopoly in EUV technology, making it a more compelling long-term investment compared to Applied Materials, which faces more uncertain growth prospects [21].