Two companies sit at the center of the AI hardware race. One builds the machines that make the chips. The other builds the chips themselves. ASML and Taiwan Semiconductor Manufacturing are not just suppliers. They are the backbone of the entire AI supply chain. Every GPU, every inference engine, every data center rack starts with their tech. The question now is which one gives investors the better shot at riding the wave.
ASML closed at $734.58 on July 19. The stock is down 23% from its 52-week high of $957.21. Volume hit 2.57 million, well above its 1.9 million average. The company trades at 25.4 times earnings and pays a 1.18% dividend. ASML still holds a monopoly on extreme ultraviolet lithography. No other firm can produce EUV machines at scale. These machines are required to fabricate chips at 3nm and below. That includes every AI processor from Nvidia, AMD, Apple and Qualcomm. ASML’s High-NA EUV systems are already shipping. The backlog sits near €7 billion. First quarter revenue jumped 46%. EPS surged 93%. Full-year guidance calls for 15% growth. China accounted for 41% of shipments in 2024. That exposure is now capped by Dutch export restrictions, but demand from Intel, Samsung and TSMC remains strong.
TSMC closed at $240.40. The stock is just 3% off its all-time high of $248.28. Volume hit 16.25 million, well above its 11.6 million average. The company trades at 25.5 times earnings and pays a 1.18% dividend. TSMC owns 62% of the global foundry market. It manufactures chips for Nvidia, AMD, Broadcom, Apple and Google. AI-related revenue tripled in 2024 and is expected to double again in 2025. First quarter revenue rose 35%. Net income jumped 53%. 3nm and 5nm chips made up 58% of wafer sales. TSMC raised its 2025 capex forecast to $42 billion. That is up from $29.8 billion in 2024. R&D spending rose 11.4%. The company is building new fabs in Arizona, Japan and Germany. U.S. yields are now higher than Taiwan. That shift could insulate TSMC from geopolitical risk.
Bullish case for ASML: monopoly on EUV, strong EPS growth, High-NA rollout, backlog visibility, global customer base, and valuation below its 5-year average P/E of 43.
Bullish case for TSMC: foundry dominance, explosive AI revenue growth, rising margins, aggressive capex, geographic diversification, and U.S. production ramp.
Bearish case for ASML: China export risk, order slowdown, and valuation compression.
Bearish case for TSMC: Taiwan exposure, rising energy costs, and smartphone demand softness.
Both stocks are essential. But only one is printing chips at scale. Only one is building the machines that make it possible. The AI boom runs through both. The returns may not.
Disclaimer: This is not financial advice.
Sources:
https://www.fool.com/investing/2025/01/12/asml-vs-tsmc-whats-the-better-ai-buy-in-2025
https://cmsprime.com/blog/ai-chip-stocks-july-2025
https://247wallst.com/investing/2024/10/30/asml-vs-tsm-the-best-ai-stock-to-buy-now
https://www.zacks.com/stock/news/2464398/asml-vs-tsm-which-semiconductor-stock-is-the-smarter-buy
https://finance.yahoo.com/news/asml-vs-tsm-semiconductor-stock-190000972.html