But which is the better buy now? Let’s find out. <\/p>\n
TSMC is a client of ASML and one of the only ones it has. ASML makes extreme ultraviolet (EUV) lithography machines and is the only company in the world with this technology. <\/p>\n While various companies in China are chasing ASML’s technology, the reality is that there are decades’ worth of investments and technology that have made ASML what it is today. Lithography machines are used to lay the microscopic electrical traces on microchips and are incredibly expensive. They are also about the size of a bus and take a dedicated crew and incredible logistics to install. Without ASML’s product, none of the technology we enjoy today would be possible. <\/p>\n TSMC is one of ASML’s biggest clients because it uses ASML’s machines in its chip fabrication process. TSMC has risen to become the world’s largest logic chip manufacturer by a wide margin. <\/p>\n The Motley Fool found that about 72% of global semiconductor revenue<\/a> is generated by TSMC’s factories. TSMC is an impossible company to replace because its sales have allowed the AI race to continue without creating too much of a bottleneck in the logic chip industry. <\/p>\n Both are vital companies that are more important than most, but because there are other logic chip fabricators out there, ASML wins in the business segment for its technological monopoly. <\/p>\n Winner: ASML <\/p>\n TSMC’s growth is smoother <\/p>\n Because ASML relies on fewer than 100 machine sales from quarter to quarter, its results are more lumpy and can lead to growth spikes. However, TSMC’s growth has been consistently higher over the past few years. <\/p>\n Next year, Wall Street analysts expect TSMC to deliver 34% growth, while ASML produces 26%. <\/p>\n Story Continues <\/p>\n That gives TSMC a clear win in the growth category, tying up the score. <\/p>\n Winner: Taiwan Semiconductor Manufacturing <\/p>\n ASML stock is expensive <\/p>\n Because both of these companies are growing at a faster-than-market pace, I think valuing the stocks using the forward price-to-earnings ratio is a smart move. From this perspective, TSMC once again shines as the better stock. <\/p>\n Clearly, most of ASML’s stock gains this year have driven the valuation into parabolic territory, which isn’t sustainable. Meanwhile, TSMC is within its normal valuation range and has a reasonable price tag. This gives me more hope looking ahead to next year, as TSMC trades below 20 times forward earnings when 2027 estimates are used. <\/p>\n This is another clear-cut win for TSMC, giving it the overall win as well<\/a>. <\/p>\n Winner: Taiwan Semiconductor Manufacturing <\/p>\n ASML is still a fantastic company and a strong stock pick, but it is just too expensive to buy when there’s a great option like TSMC trading at relatively low prices. We’ll see how the next year pans out, but I’m confident that Taiwan Semiconductor Manufacturing will dramatically outperform ASML from now until the end of 2027. <\/p>\n Should you buy stock in Taiwan Semiconductor Manufacturing right now? <\/p>\n Before you buy stock in Taiwan Semiconductor Manufacturing, consider this: <\/p>\n The Motley Fool Stock Advisor analyst team just identified what they believe are the\u00a010 best stocks<\/a> for investors to buy now\u2026 and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. <\/p>\n Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation,\u00a0you’d have $419,408!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,348,694!* <\/p>\n Now, it’s worth noting\u00a0Stock Advisor’s total average return is 966% \u2014 a market-crushing outperformance compared to 213% for the S&P 500.\u00a0Don’t miss the latest top 10 list, available with\u00a0Stock Advisor, and join an investing community built by individual investors for individual investors. <\/p>\n See the 10 stocks \u00bb<\/a> <\/p>\n *Stock Advisor returns as of August 20, 2026. <\/p>\n Keithen Drury<\/a> has positions in Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends ASML and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy<\/a>. <\/p>\n<\/a> Image source: Getty Images. ASML has a rare technological monopoly <\/p>\n
<\/a> TSM Revenue (Quarterly YoY Growth)<\/a> data by YCharts<\/a> <\/p>\n
<\/a> TSM PE Ratio (Forward)<\/a> data by YCharts<\/a> <\/p>\n
<\/a> TSM PE Ratio (Forward 1y)<\/a> data by YCharts<\/a> <\/p>\n