ASML Technologies, a leading manufacturer of lithography machines for semiconductors, is experiencing a buying opportunity due to geopolitical tensions with China. The company’s dominance in extreme ultraviolet lithography machines makes it crucial for high-end chip production, particularly in data centers for artificial intelligence.
In contrast, Palantir Technologies’ stock has skyrocketed 800% since last year, driven by its growth in government and enterprise customers. However, the valuation may be unsustainable at over 50 times revenue, making it a riskier investment.
ASML’s decline is largely due to China’s growing influence in its business, which represents nearly half of total revenue. The US has pressured ASML to restrict its ties with China, leading to lower-than-expected revenue guidance for 2025.
Despite the concerns, analysts believe the geopolitical tensions are temporary and may not permanently damage ASML’s prospects. The company remains a monopolist in EUV machines, and global demand for chips is expected to rise over time, creating opportunities for growth.
ASML’s stock trades at a price-to-earnings ratio of 32, below its 10-year average of 37. While it may not be a sure thing due to the geopolitical uncertainty, ASML appears safer than Palantir, which has become a bubble at these prices.
Source: https://www.fool.com/investing/2024/11/12/should-you-buy-this-millionaire-maker-stock-instea