Better AI Stock: ASML vs. Nvidia

By Chris Neiger – Dec 17, 2025 at 3:10PM ESTKey PointsASML makes semiconductor manufacturing equipment, and holds 90% market share.Nvidia's GPUs are in heavy demand from tech giants, and its earnings surged 67% higher in the third quarter.Nvidia's shares are cheaper than ASML's.These 10 Stocks Could Mint the Next Wave of Millionaires ›NASDAQ: NVDANvidiaMarket Cap$4.3TToday's Changeangle-down(-3.72%) $6.62Current Price$171.10Price as of December 17, 2025 at 3:58 PM ETIn the booming AI sector, both ASML and Nvidia have wide moats.Stocks in the semiconductor sector have been among the most sought-after investments over the past few years, as demand for artificial intelligence (AI) processors has surged. Two companies that have benefited from the trend are semiconductor manufacturing equipment maker ASML Holdings (ASML 5.63%) and chip designer Nvidia (NVDA 3.72%). Both could continue to benefit from heavy spending on AI infrastructure, which is forecast to reach between $3 trillion and $4 trillion over the next five years. But which one looks like the better AI stock to buy now and hold for the long term? Image source: Getty Images. Nvidia's AI dominance Nvidia's ability to meet the soaring demand for powerful parallel processors propelled the company's market capitalization from approximately $364 billion at the end of 2022 to around $4.3 trillion today. Its dominance in the AI semiconductor market has led to skyrocketing revenue and earnings. In its fiscal 2025 (which ended Jan. 26, 2025), Nvidia's sales rose by 114% to $130.5 billion, and its diluted earnings per share (EPS) jumped 130% to $2.99. And the good times are still rolling for Nvidia. Its revenue increased by 62% in its fiscal 2026 third quarter to $57 billion, and EPS popped by 67% to $1.30. The chipmaker's ability to grow sales and earnings so quickly stems from its estimated 90% share of the data center GPU market. The company's chip designs are superior to competitors' at AI processing, leaving tech giants clamoring for its most advanced semiconductors.Advertisement ExpandNASDAQ: NVDANvidiaToday's Change(-3.72%) $-6.62Current Price$171.10Key Data PointsMarket Cap$4.3TDay's Range$170.31 - $176.1352wk Range$86.62 - $212.19Volume181MAvg Vol192MGross Margin70.05%Dividend Yield0.02% Moreover, the AI chip market's growth will have more drivers than chatbots from OpenAI and Alphabet. Tech companies are increasingly betting on robotics, self-driving vehicles, and other autonomous systems that will also require advanced AI processors. Consider that Morgan Stanley estimates the humanoid robotics market could be worth $5 trillion by 2050. As these other markets begin to take shape, it could fuel further sales growth for Nvidia's processors. ASML benefits from demand for Nvidia's processors ASML makes some of the key equipment required to manufacture AI processors, which it sells to foundry operators like Taiwan Semiconductor, which in turn churn out the semiconductors designed by clients like Nvidia. This part of the supply chain has boomed lately, and ASML's shares are up 52% over the past year. ASML enjoys an enviable position in the AI chip manufacturing equipment space, holding an estimated 90% market share in lithography. That's impressive enough, and research from Morningstar indicates that ASML's technology is a decade ahead of its rivals. When it comes to making the most advanced chips, its machines hold a technological monopoly, because no peer offers similarly capable options. The company also benefits from the fact that it services the machines it sells, providing it with potentially decades of recurring revenue for each machine. ASML's service revenue rose 39% in the first nine months of this year to 6 billion euros, and more growth is expected on that front as it sells more equipment that could remain in use for up to 30 years. ExpandNASDAQ: ASMLASMLToday's Change(-5.63%) $-60.55Current Price$1015.50Key Data PointsMarket Cap$417BDay's Range$1010.01 - $1065.2952wk Range$578.51 - $1141.72Volume128KAvg Vol1.5MGross Margin52.70%Dividend Yield0.69% While there are some concerns about the possibility that the AI market may be in a bubble, it's important to note that ASML, like Nvidia, is highly profitable. The company's gross margins hover in the low 50% range, and in the first nine months of this year, its diluted earnings per share were $17.38 -- a 40% increase from the same period in 2024. Why Nvidia has a slight edge over ASML I think both of these AI stocks deserve a place in most people's portfolios, but Nvidia gets the win in this matchup because its shares are cheaper than ASML's. Nvidia's stock trades at a price-to-earnings ratio of just 23 right now, compared to ASML's P/E ratio of 34. It's worth noting, though, that both are well below the tech sector's average P/E ratio of 45. And while Nvidia does get my vote, you probably couldn't go wrong buying either stock and holding onto it for years to come.About the AuthorChris Neiger has been a contributing Motley Fool technology and automotive analyst since 2012.

Before The Motley Fool, Chris was an automotive journalist for the BBC. He holds a master’s degree in journalism from Regent University and a bachelor’s degree from the University of Delaware.TMFNewsieRead NextDec 17, 2025 •By Howard Smith1 Prediction for Nvidia in 2026Dec 17, 2025 •By Mark Roussin, CPA5 Stocks to BUY With Rates Coming DownDec 17, 2025 •By Adria CiminoNvidia vs AMD: Which AI Chipmaker Will Lead the Next Decade of Compute?Dec 17, 2025 •By David Jagielski, CPAIf This Happens, Nvidia's Jensen Huang Says It Would "Drag This Industry Into a Halt"Dec 17, 2025 •By Sean WilliamsWill the Bubble Burst on Artificial Intelligence (AI) Stocks Nvidia and Palantir in 2026? History Weighs in and Offers a Big Clue.Dec 16, 2025 •By Manali Pradhan, CFAAnalysts May Still Be Underestimating Nvidia's Long-Term Growth Potential