Because the demand for semiconductors is increasing rapidly, huge investments are being made by governments and enterprises to address a supply shortage. We think the industry’s solid growth should benefit ASML (ASML) and Broadcom (NASDAQ:AVGO). But which of these stocks is a better buy now? Let’s discuss.ASML Holding N.V. (NASDAQ:ASML) in Veldhoven, the Netherlands, and San Jose, Calif.-based Broadcom Inc. (AVGO) are two prominent players in the semiconductor industry. ASML develops, sells, and services advanced semiconductor equipment systems, focusing on lithography-related systems worldwide. It caters mainly to the makers of memory chips and logic chips. In comparison, AVGO designs and supplies a range of analog and digital semiconductor connectivity solutions used in data center networking, home connectivity, broadband access, telecommunications equipment, smartphones, and base stations.
The heightened demand for semiconductor chips from various industries, mainly automotive and consumer electronics, amid a global chip supply crunch has driven prices higher. However, the industry recorded 29% year-over-year sales growth in July 2021. And because rising government and corporate investments in the semiconductor industry should gradually address the supply crunch, the industry should witness solid growth. The global semiconductor market is expected to grow at 7.7% CAGR to $778 billion by 2026. So, both ASML and AVGO should benefit.
While AVGO’s shares have gained 12.9% in price year-to-date, ASML has surged 75.9%. ASML is a clear winner with 9.5% price gains versus AVGO’s 1.8% returns in terms of their past month’s performance. But which of these stocks is a better pick now? Let’s find out.