Which Semiconductor Equipment Manufacturers Offer Better Value: AMAT or ASML in 2026?

The semiconductor industry stands at a critical inflection point as artificial intelligence adoption accelerates global demand for advanced chips. Two semiconductor equipment manufacturers—Applied Materials (AMAT) and ASML Holding (ASML)—have become indispensable to this transformation, yet they take fundamentally different technological approaches. AMAT specializes in materials engineering and layer modification systems, while ASML dominates lithography-based chip patterning through its proprietary extreme ultraviolet (EUV) technology. Understanding how these semiconductor equipment manufacturers are positioned for 2026 and beyond reveals important investment distinctions.

Market Dynamics Reshaping the Equipment Landscape

The semiconductor equipment manufacturers sector is experiencing unprecedented transformation driven by three converging forces: the proliferation of AI chips requiring advanced architectures, the migration toward more efficient manufacturing processes, and evolving geopolitical trade dynamics. Both AMAT and ASML are benefiting from increased capital spending by chip producers, but their respective growth trajectories differ significantly.

AMAT is capitalizing on the explosive demand for high-bandwidth memory (HBM) and advanced node logic manufacturing. The company’s fiscal 2025 HBM business generated $1.5 billion in revenue, with management targeting $3 billion within the next few years. This growth trajectory reflects the industry’s insatiable appetite for memory solutions that power AI training and inference applications. AMAT’s NAND flash memory business nearly doubled to $1.41 billion in fiscal 2025, compared to $747.4 million in the prior year—a remarkable expansion despite U.S. export restrictions on the Chinese market.

ASML, conversely, is navigating a industry-wide transition from complex multi-patterning approaches to single-exposure lithography processes. This shift from deep ultraviolet (DUV) toward extreme ultraviolet (EUV) technology is reshaping how advanced chips are manufactured, offering chipmakers improved yields, reduced process complexity, and better scaling capabilities.

Applied Materials: The Diversified Growth Engine

AMAT’s comprehensive product portfolio addresses multiple critical manufacturing stages. The company’s specialization in Gate-All-Around transistors at 2nm and below, backside power delivery, advanced wiring solutions, and 3D device metrology positions it as a cornerstone supplier for next-generation semiconductor production.

Recent product launches underscore AMAT’s innovation momentum. The Kinex die-to-wafer hybrid bonding system represents a technological breakthrough for HBM manufacturing, while Xtera epi and PROVision 10 eBeam tools expand the company’s addressable market. These innovations are expected to drive meaningful revenue expansion throughout 2026 and beyond.

Financial projections from Zacks Investment Research suggest AMAT’s revenues will expand 2.3% in fiscal 2026, accelerating to 11.5% growth in fiscal 2027. Earnings growth demonstrates even more impressive momentum, with estimates calling for 1.6% expansion in fiscal 2026 followed by 19.5% growth in fiscal 2027. Recent upward estimate revisions indicate growing analyst confidence in the company’s execution.

ASML: Monopoly Power in Critical Technology

ASML’s command of EUV lithography technology provides it with near-monopolistic control over the production equipment essential for manufacturing the world’s most advanced chips at 3nm and below. As chipmakers increasingly adopt EUV processes—particularly Low Numerical Aperture (Low-NA) and High Numerical Aperture (High-NA) EUV systems—ASML stands to benefit from this secular shift.

The company’s High-NA EUV machines represent the next technological frontier for sub-2nm chip production, offering a multi-year growth runway as the industry advances toward greater transistor density and efficiency. Management’s third-quarter 2025 commentary highlighted reduced geopolitical uncertainty and improved customer confidence in long-term capital commitments, which should support stronger 2026 bookings.

However, headwinds exist. ASML expects its DUV business to decline as customers migrate to EUV platforms, and China revenues are projected to normalize downward in 2026. The Zacks consensus forecasts 4% revenue growth and 5% earnings expansion for 2026, representing more modest expansion compared to AMAT’s projected trajectory.

Valuation Context and Market Performance

Over the preceding twelve-month period, AMAT shares appreciated 69.5% while ASML advanced 78.1%, reflecting strong investor enthusiasm for both semiconductor equipment manufacturers. However, current valuations reveal important distinctions.

Applied Materials trades at a forward twelve-month price-to-earnings ratio of 32.76x, exceeding its historical median of 18.71x. ASML commands a more significant premium at 43.57x its forward earnings multiple, compared to its median of 27.83x. The valuation spread reflects market expectations regarding each company’s growth prospects and risk profile.

The Investment Decision: Weighing Risk and Opportunity

Both AMAT and ASML carry Zacks Rank #2 (Buy) designations, affirming their long-term secular attractiveness. Yet the divergence in near-term trajectories suggests differentiated risk-reward profiles.

AMAT benefits from diversified revenue streams spanning HBM, NAND, logic, and foundry applications. The company’s 11.5% fiscal 2027 revenue growth guidance and 19.5% earnings acceleration suggest substantial upside from current levels, particularly as hybrid bonding adoption accelerates. Critically, AMAT’s exposure to the Chinese market has not constrained its recent NAND expansion.

ASML’s EUV monopoly provides durable competitive advantages for advanced node manufacturing. However, the normalization of China revenues—a historically significant contributor—alongside modest mid-single-digit growth guidance tempers near-term enthusiasm. While the company’s High-NA technology offers long-term optionality, the margin of safety appears more limited.

Among the semiconductor equipment manufacturers examined, AMAT’s combination of diversified growth drivers, accelerating earnings expansion, and more reasonable valuation positioning makes it the more compelling investment opportunity for the current market environment.