Nvidia has solidified its position as an influential leader in the semiconductor industry, especially with its critical role in advancing artificial intelligence (AI). The company’s dominance is accompanied by impressive financial performance, with a significant increase in free cash flow, reaching $60.7 billion in fiscal 2025, driving growth and investor interest.
However, it’s essential for investors to also consider ASML, a key player in the semiconductor sector often overshadowed by Nvidia. ASML stands out as the only manufacturer of extreme ultraviolet lithography (EUV) machines. These EUV systems, which operate at a groundbreaking wavelength of 13.5 nanometers, are indispensable for the fabrication of the most complex microchips. By streamlining the manufacturing processes for its customers, ASML sets itself apart from competitors reliant on deep ultraviolet lithography (DUV) machines.
While Nvidia generates substantial revenue—$130.5 billion in fiscal 2025—ASML’s financial growth is noteworthy. ASML’s free cash flow jumped from 3.2 billion euros in 2023 to 9.1 billion euros in 2024, contributing to a higher free cash flow yield of 2.4% compared to Nvidia’s 1.6%. This positions ASML as a more appealing investment option at present, particularly for those seeking value.
ASML’s shares currently trade at 38 times trailing earnings, which, while not classified as cheap, is competitive when compared to the company’s five-year average of 39.6 times. This valuation presents a promising opportunity for investors considering a stake in the company.
While Nvidia remains a valuable asset for tech-focused portfolios, investors might find greater value in ASML right now. The semiconductor industry’s sustained growth, bolstered by developments in AI, continues to promise potential returns for investors. With ASML’s unique technological edge and financial metrics, the timing may be right to invest in this critical player in the semiconductor landscape.