At the heart of the artificial intelligence revolution, two companies — one Dutch, one Californian — are building the physical infrastructure of a new technological era, yet the market has priced their futures with striking asymmetry. ASML quietly forges the machines that make modern chips possible, while AMD rides a wave of visible momentum, its stock climbing on record revenues and bold guidance. The deeper question these two stories pose is an ancient one in investing: do we pay for what is already celebrated, or for what is quietly indispensable?
ASML Offers Better Value Than AMD in AI Chip Race Despite AMD's Momentum
ASML's lower valuation suggests the market has priced in less optimism
Mark
So we have two companies in the same AI boom, but one stock is up 35 percent and the other is flat. Why would anyone buy the flat one?
Mimi
Because the flat one might be cheaper. AMD is growing faster right now, but investors have already bid up its stock to reflect that growth. ASML is growing too, just more slowly in the near term, and the market hasn't priced in its long-term importance yet.
Luke
But hold on—ASML's guidance for Q3 suggests growth is actually slowing down, not just slower than AMD's. They're guiding to essentially flat year-over-year revenue. That's not a bargain; that's a slowdown.
Mimi
True, but that's partly because of macroeconomic uncertainty and tariff concerns that management flagged. The underlying demand for their machines is still strong. Their first-half results were excellent.
Mark
And AMD had to write off $800 million in chips it couldn't sell to China. Doesn't that suggest AMD has real problems?
Mimi
It's a headwind, but AMD's net income still grew 229 percent. The company is working to get approval to sell to China again, and when it does, that's a huge upside.
Luke
Right, but that's a conditional future. We don't know when or if China approval comes back. We do know ASML's Q3 guidance is conservative. Which is more certain?
Mark
So the argument for ASML is basically that it's undervalued relative to its long-term role in AI, even if the stock doesn't move much in the near term?
Mimi
Exactly. The AI market is projected to grow from $244 billion to $1 trillion by 2031. ASML's machines are essential to that entire supply chain. AMD is a great company, but ASML's valuation multiple has actually compressed while AMD's has expanded.
Luke
That's fair, but valuation multiples compress for a reason sometimes. We should be honest that ASML's stock is flat partly because the company itself is signaling caution about the near term.
Mark
So it's a question of time horizon. AMD if you want growth now, ASML if you can wait.
Mimi
And if you believe ASML's long-term role in AI is underappreciated by the market right now.
Le Pouls
- AMD's stock surged 35% in 2025 on record $7.7B quarterly revenue, matching Nvidia's gains and drawing intense investor enthusiasm — yet an $800M inventory write-off from U.S. export restrictions to China quietly erased its operating profit for the quarter.
- ASML's first-half results were quietly extraordinary — revenue up 34%, operating income up 57% — but a cautious third-quarter outlook spooked markets and left the stock flat for the year despite the company's irreplaceable role in chip manufacturing.
- The tension between these two stocks is a tension between narrative and valuation: AMD commands a premium multiple because its growth story is loud and legible, while ASML's compressed valuation reflects near-term uncertainty that may be obscuring long-term strength.
- AMD is actively working to recover government approval to resume AI chip sales to China, a potential catalyst that management believes could unlock dramatic additional growth — but the regulatory risk remains unresolved.
- With the AI market projected to expand from $244B to $1 trillion by 2031, both companies sit on the same rising tide — but ASML's lower price-to-earnings ratio suggests the market has left more room for patient investors to benefit from that growth.
At the heart of the artificial intelligence revolution, two companies — one Dutch, one Californian — are building the physical infrastructure of a new technological era, yet the market has priced their futures with striking asymmetry. ASML quietly forges the machines that make modern chips possible, while AMD rides a wave of visible momentum, its stock climbing on record revenues and bold guidance. The deeper question these two stories pose is an ancient one in investing: do we pay for what is already celebrated, or for what is quietly indispensable?
Two companies sit at the center of the AI hardware boom, yet the market is treating them very differently. ASML, the Dutch maker of lithography machines — the equipment that etches billions of transistors onto fingernail-sized chips — is the only company in the world capable of doing this work at the precision AI demands. It expected 2025 sales to grow 15% over 2024's roughly $33 billion, a meaningful acceleration. Its first-half numbers were strong: $18 billion in revenue, operating income of $5.8 billion, and net income of $5.4 billion. Yet the stock went nowhere, weighed down by cautious third-quarter guidance that pointed to essentially flat growth versus the prior year, and management warnings about tariffs and economic uncertainty.
AMD told a louder story. Shares climbed 35% through early August as the company posted record second-quarter revenue of $7.7 billion, up 32% year-over-year. CEO Lisa Su pointed to robust demand across computing and AI product lines, and guided for $8.7 billion in Q3 revenue — up sharply from $6.8 billion the prior year. Beneath those headlines, however, was a significant complication: U.S. export restrictions forced AMD to write off $800 million in AI chip inventory it could no longer sell to China, pushing operating income into a loss of $134 million. Net income still surged 229% to $872 million, and AMD is working to regain approval to resume those sales — a potential catalyst management believes could drive even stronger growth.
The real question for investors is whether they are paying too much for AMD's momentum or getting a bargain on ASML's fundamentals. AMD's price-to-earnings multiple has expanded alongside its stock price, meaning each dollar of earnings now costs more. ASML's multiple has compressed, making it cheaper relative to its profits despite its foundational role in the AI supply chain. With industry forecasts projecting the AI market to grow from $244 billion to $1 trillion by 2031, both companies will benefit — but ASML's lower valuation may represent the quieter, more durable opportunity for investors willing to look past near-term caution.
Two companies sit at the center of the artificial intelligence boom, yet they're taking very different paths to profit. ASML, a Dutch manufacturer of lithography equipment, and AMD, the California chipmaker, both supply essential hardware to the AI industry. But their stock performance this year tells starkly different stories—and the gap between what the market is paying for each company's future may reveal which is the better buy.
ASML makes the machines that etch transistors onto silicon at scales so small that a fingernail-sized chip contains billions of them. This is the foundational work of AI: the technology demands computing power so immense that manufacturers must shrink every component to near-invisible dimensions, and ASML's equipment is the only way to do it at the precision required. The company expected 2025 sales to grow 15 percent over 2024's 28.3 billion euros, or about $33 billion. That's a meaningful acceleration from 2024, when revenue grew just 2.6 percent year-over-year. Yet through August 6, ASML's stock had gone nowhere—flat for the year—as management warned of economic headwinds ahead, citing concerns about tariff policies and broader uncertainty.
The first half of 2025 told a different story. ASML pulled in $18 billion in revenue, up from $13.4 billion the year before. Operating income jumped to $5.8 billion from $3.7 billion. Net income reached $5.4 billion, a substantial climb from $3.3 billion. These are the numbers of a company firing on all cylinders. But the company's guidance for the third quarter—revenue between $8.6 billion and $9.2 billion—suggested the pace of growth might be cooling. The prior year's third-quarter sales had been $8.9 billion, meaning ASML was essentially guiding to flat performance. That caution, more than anything else, explained why the stock had stalled.
AMD, by contrast, was having a banner year. Shares had climbed 35 percent through early August, matching Nvidia's gain. The company's second-quarter results justified the enthusiasm. Revenue hit a record $7.7 billion, up 32 percent year-over-year. CEO Lisa Su told investors the company was seeing robust demand across its computing and AI product lines and expected strong growth in the second half. For the third quarter, AMD was guiding to $8.7 billion in revenue, up from $6.8 billion the year before.
But beneath those headline numbers lay a complication. AMD had taken an $800 million inventory write-off in the quarter after the U.S. government imposed new restrictions on the sale of AI chips to China. The company had manufactured chips it could no longer sell, and it had to absorb the loss. As a result, operating income fell to a loss of $134 million, compared to operating income of $269 million in the prior year. Yet AMD's net income still surged to $872 million, up 229 percent year-over-year, and diluted earnings per share jumped 238 percent to $0.54. The company was working to regain government approval to sell to China, and when that happened, management believed it could deliver even more dramatic growth.
The choice between the two companies hinges on a single question: Are you paying too much for growth, or are you getting a bargain on value? AMD's momentum is undeniable. The company is growing faster, its earnings are accelerating, and it has a clear path to recovering lost sales once China restrictions lift. ASML, by contrast, is guiding to slower growth and warning of near-term uncertainty. Yet when you look at what investors are willing to pay for each dollar of earnings—the price-to-earnings ratio—the picture inverts. ASML's valuation multiple has compressed over the past year, meaning the stock has become cheaper relative to its profits. AMD's multiple has expanded as the stock has climbed, meaning investors are paying more for each dollar of earnings. By this measure, ASML looks like the bargain.
The long view matters here. Industry forecasts project the AI market will grow from $244 billion in 2025 to $1 trillion by 2031. Both companies will benefit from that expansion. ASML's machines will be essential to manufacturing the next generation of chips. AMD's processors will power the data centers that run AI applications. But ASML's lower valuation suggests the market has priced in less optimism about its future, even though the company's role in the AI supply chain is irreplaceable. For an investor with patience and a long time horizon, that gap between price and fundamentals may represent the better opportunity.
Citations marquantes
We are seeing robust demand across our computing and AI product portfolio and are well positioned to deliver significant growth in the second half of the year.— Lisa Su, AMD CEO
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