QUALCOMM Incorporated

(NASDAQ Global Select)
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Somewhat Bearish -35

ASML vs. QCOM: Which Semiconductor Stock is the Better Buy Now?

AI-generated analysis

📈 ASML plans to increase its 2027 Low-NA EUV capacity by approximately 30% from a 2026 level of roughly 65 systems, driven by strong customer commitments for AI-related investment.

📉 Qualcomm faces tough competition in the AI PC market where a shift in OEM share has reduced near-term opportunities to sell integrated chipsets from the Snapdragon platform.

💰 ASML's Zacks Consensus Estimate implies 2026 sales growth of 36% and an EPS surge of 61%, with EPS estimates trending up 22.9% over the past 60 days.

📉 Qualcomm's fiscal 2026 consensus estimates indicate a year-over-year sales decline of 2.8% and an EPS fall of 12.4%, with EPS estimates trending down 1.9% recently.

🚀 Qualcomm is entering the custom silicon space with a leading hyperscaler, expecting initial shipments in the December quarter to add a revenue stream not tied to handset cycles.

⚠️ Memory supply constraints and related pricing are adversely impacting Qualcomm's handset revenues as OEMs, particularly in China, continue to draw down channel inventory.

📊 Over the past year, ASML shares have gained 115% compared to Qualcomm's 9.2% gain, though Qualcomm trades at a lower price-to-sales ratio of 4.18 versus ASML's 11.61.

🔮 Long-term growth expectations are significantly higher for ASML at 44.9% compared to Qualcomm's likely growth of 6.2%, influencing the final investment recommendation.

Bullish Signals
  • Qualcomm is well-positioned to meet long-term revenue targets driven by solid 5G traction and a diversified revenue stream extending into edge networking, automotive telematics, and connected vehicles.
  • The company is successfully transitioning from a wireless communications firm to a connected processor company for the intelligent edge with healthy traction in next-generation PCs, wearables, and tablets.
  • Qualcomm is entering the custom silicon space with a leading hyperscaler, expecting initial shipments in the December quarter which adds a revenue stream not tied to handset unit cycles.
  • The Alphawave buyout has added high-speed wired connectivity IP and custom silicon capabilities to help accelerate the company's expansion into data centers.
Risk Factors
  • Qualcomm faces tough competition from ASML in the AI PC market, where a shift in share among OEMs at the premium tier has reduced near-term opportunities to sell integrated chipsets.
  • Memory supply constraints and related pricing are adversely impacting Qualcomm's handset revenues as OEMs, particularly in China, continue to draw down channel inventory.
  • The Zacks Consensus Estimate for fiscal 2026 indicates a year-over-year sales decline of 2.8% and an EPS fall of 12.4%, with analyst sentiment trending downward.
Full Analysis
The article compares semiconductor stocks ASML and Qualcomm (QCOM), focusing on their positions in the AI and data center ecosystems. While ASML is highlighted for its critical role in lithography equipment with significant capacity expansions planned for 2027 and 2028, Qualcomm is noted for its transition from a mobile-focused firm to a connected processor company serving PCs, servers, and automotive sectors. Qualcomm aims to extend its Oryon CPU and AI acceleration beyond smartphones into PCs and servers, with initial shipments of custom silicon expected in the December quarter. However, the text notes that Qualcomm faces tough competition in the AI PC market and is currently dealing with memory supply constraints that are adversely impacting handset revenues, particularly as OEMs draw down channel inventory. Financial consensus estimates reveal a stark divergence between the two companies for fiscal 2026. ASML is projected to see sales grow by 36% and EPS surge by 61%, reflecting strong demand visibility driven by AI infrastructure investments. In contrast, Qualcomm's consensus estimates indicate a year-over-year sales decline of 2.8% and an EPS fall of 12.4%, with recent analyst sentiment trending downward. Despite ASML's superior growth trajectory and outperformance over the past year, the article concludes that Qualcomm appears more attractive from a valuation standpoint, trading at a significantly lower price-to-sales ratio. However, given long-term growth expectations of 44.9% for ASML versus 6.2% for Qualcomm, the analysis ultimately favors ASML as the better investment option at the moment.