Comparing ASML and Lam Research: Which One Is the Best Buy?
Lam faces a tough slowdown in 2024
In fiscal 2022 (ended in June 2022), Lam's revenue and earnings per share (EPS) grew 18% and 22%, respectively. But in fiscal 2023, its revenue and EPS only increased 1%. Lam's growth stalled as sales of PCs cooled in a post-pandemic market, consumers bought fewer 5G phones, and U.S. regulators blocked exports of advanced chips to China. Rising interest rates and macro headwinds exacerbated that pain.
ASML faces many of the same challenges
ASML's revenue rose 14% in 2022 and 30% in 2023. Its growth accelerated as the 'process race' between Taiwan Semiconductor Manufacturing Company, Samsung, and Intel to manufacture smaller chips lifted its sales of EUV systems. Chinese chipmakers also scrambled to accumulate more systems before new export curbs kicked in. ASML's EPS dipped 2% in 2022 but surged 41% in 2023.
- Both companies are linchpins and bellwethers of the semiconductor market.
- Lam's stock nearly doubled in the past 12 months, outpacing ASML's 50% rise.
- Analysts expect Lam's revenue and earnings to decline 15% in fiscal 2024, while ASML faces a 2% revenue rise and 3% earnings dip.
The post concludes that while both ASML and Lam Research offer long-term potential, Lam emerges as the better buy due to its diversified business, stock valuation, and growth prospects. ASML faces challenges in the near term, raising concerns about its current valuation and growth trajectory.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.