Lam Research outshines ASML: a deeper dive into investment grades
Amsterdam, Sunday, 13 July 2025.
Investors are keenly watching the semiconductor sector. A new analysis reveals a significant gap between ASML Holding NV and Lam Research Corporation. AAII’s A+ Investor Grades show Lam Research with a superior earnings estimate score of 73, compared to ASML’s 39. This difference suggests Lam Research may offer a more promising investment. Lam Research also boasts higher scores in growth (87 vs 63) and momentum. Is ASML losing its edge, or is this a temporary setback?
Market capitalization and revenue analysis
ASML’s market capitalization reached $311.1 billion, showing a 15.7% increase in 2025 [1]. The company’s price-earnings ratio stands at 33.5 [1]. ASML’s trailing 12-month revenue was $33.3 billion, with a net profit margin of 28.3% [1]. Lam Research has a market cap of $130.1 billion, up significantly by 40.8% in 2025 [1]. Its price-earnings ratio is 28.3 [1]. Lam Research’s trailing 12-month revenue amounted to $17.1 billion, achieving a net profit margin of 27.2% [1]. These figures highlight the different scales and growth trajectories of the two companies.
Earnings estimates and growth scores
Analysts predict ASML’s adjusted earnings per share to be $27.375 for the current fiscal year [1]. Lam Research’s expected adjusted earnings per share are notably lower at $4.013 [1]. ASML has a Growth Score of 63, categorized as ‘Strong,’ according to AAII [1]. Lam Research outperforms with a Growth Score of 87, labeled as ‘Very Strong’ [1]. These scores reflect investor sentiment regarding each company’s growth potential relative to others in the semiconductor equipment industry [1].
Morgan Stanley’s outlook on ASML
Morgan Stanley anticipates strong order volumes for ASML in the second quarter of 2025 [2]. This expectation is driven by potential demand from the Chinese market and a recovery at Taiwan Semiconductor Manufacturing (TSMC) [2]. However, Morgan Stanley maintains a ‘hold’ rating on ASML, with a target price of €660, reflecting cautious growth expectations [2]. The firm notes that slower growth in EUV technology layering could negatively impact ASML’s outlook and valuation [2]. Morgan Stanley forecasts ASML’s revenue growth between 2024 and 2027 to be around 11% to 13% [2].
Potential shifts in regional sales
Morgan Stanley projects an increase in the proportion of ASML’s sales coming from the Chinese market in fiscal year 2025 [2]. The Chinese market’s contribution could rise from approximately 20% to around 25% [2]. ASML’s Q2 2025 orders are expected to exceed €4 billion, boosted by demand from China and TSMC [2]. The firm anticipates ASML may raise its guidance for China’s sales proportion in 2025, possibly reaching 27% to 29%, compared to the previous 25% [2].
ASML’s technological advancements and challenges
ASML has secured a patent for equipment and methods designed to control the environment around the nozzle of a droplet generator [7]. The company also obtained a patent for an irradiation source and related measurement equipment [7]. Recent reports indicate slow sales of ASML’s latest lithography machines, with major clients allegedly turning away [7]. Approximately five units of the newest lithography machine have been shipped [7]. These developments highlight both ASML’s ongoing innovation and potential challenges in market adoption of its advanced technologies.
Lam Research’s financial metrics and market position
Lam Research’s financial metrics reveal a strong position [7]. The company’s return on assets (ROA) is 24.36%, return on equity (ROE) is 53.14%, and return on invested capital (ROIC) is 35.18% [7]. Its quick ratio is 1.64, gross margin is 48.05%, operating margin is 30.88%, and profit margin is 27.19% [7]. Goldman Sachs recently expressed a bullish outlook on Lam Research, along with Applied Materials (AMAT) and Seagate Technology (STX) [7].