ierenSie sich besser an Semiconductor-Aktien: Wolfspeed gegenüber ASML
The semiconductor industry is a golden opportunity for investment due to numerous long-term trends. These include the booming markets of AI, electric vehicles (EVs), and renewable energy, all of which heavily depend on semiconductor products [Enrichment Data: 1%]. Two companies in this sector have seen a decrease in share prices over the past year, creating potential investment opportunities. They are Wolfspeed (WOLF) and ASML (ASML) [Base Article: 50%].
Wolfspeed's stock has plummeted over 80% in a year, while ASML's share price fell over 40% from its 52-week high to its current level [Base Article: 35%]. Among these two semiconductor giants, which one offers the better investment option for the long haul? Let's delve deeper to find out [Base Article: 15%].
Wolfspeed's pros and cons
Wolfspeed specializes in silicon carbide (SiC) products, which are crucial for producing smaller, more efficient power components, particularly in EVs [Base Article: 20%]. Due to the aforementioned long-term trends, Wolfspeed's management anticipates an increase in SiC demand, potentially quadrupling annual sales from $807 million to $3 billion by 2024 [Base Article: 10%].
However, currently, Wolfspeed's revenue is in decline. Sales dropped to $194.7 million in the company's 2025 fiscal first quarter, down from $197.4 million in the previous year [Base Article: 10%]. The company anticipates this decline to continue into its fiscal Q2, with revenue predicted to range between $160 million and $200 million compared to the previous year's $208.4 million [Base Article: 10%].
Working in a cyclical industry, Wolfspeed has suffered softness in the industrial and energy sectors, causing sales to drop and hurting the company's profitability [Base Article: 10%]. In just a quarter, its gross profit went from $2.4 million in Q4 to a loss of $36.2 million in Q1, as its cost of revenue increased more than 30% year over year [Base Article: 10%].
Wolfspeed is seeking to cut costs, aiming to achieve $200 million in annual savings [Base Article: 10%]. Its CEO resigned in November 20XX, and the company has an immense debt burden of over $3 billion. Despite these challenges, Wolfspeed has recorded growth in its EV business and expects EV revenue to continue expanding throughout 2025 [Base Article: 10%].
A look at ASML
ASML manufacturers lithography equipment used in constructing semiconductor chips. It holds the monopoly in extreme ultraviolet (EUV) lithography, used to create the most advanced chips, such as those utilized in AI [Base Article: 25%].
Despite ASML's market strength in EUV lithography, why has its stock price fallen? Like Wolfspeed, ASML suffers from the effects of a cyclical downturn. Due to macroeconomic conditions, ASML projects its full-year 2024 revenue to be around 28 billion euros, a slight increase over the prior year's 27.6 billion euros [Base Article: 20%].
Furthermore, geopolitical tensions have resulted in government restrictions on semiconductor-related sales to China. In its fiscal Q3, ASML's sales to China accounted for nearly half its income in the quarter, and the company expects this percentage to drop to roughly 20% in 2025 [Base Article: 20%].
However, these challenges are temporary. ASML has shown strong financial performance, notching 3.8 billion euros in gross profit in Q3, an improvement from 3.5 billion euros in the previous year [Base Article: 20%]. ASML's balance sheet is robust, with total assets of 41.8 billion euros compared to total liabilities of 25.6 billion euros [Base Article: 20%].
Making a decision between Wolfspeed and ASML
Both Wolfspeed and ASML face challenges at the moment, but which is more likely to see its business rebound over the long term, making it the better semiconductor investment? After careful consideration, ASML appears to be the better choice.
Wolfspeed operates in a fiercely competitive market, while ASML is the lone player in EUV lithography equipment, competing only with older lithography technology providers [Enrichment Data: 1%]. In addition, ASML is in a robust financial position, as shown by its balance sheet and gross profit growth [Base Article: 20%].
Moreover, when compared to Wolfspeed's lower price-to-sales (P/S) ratio, indicating a better value, ASML deserves a higher valuation due to its superior financials and monopoly in EUV lithography equipment [Base Article: 10%]. Reviewing each stock's earnings per share (EPS) reveals that ASML has consistently grown its EPS, while Wolfspeed's EPS has decreased [Base Article: 10%].
Consequently, ASML seems to be the better semiconductor stock to invest in for the long term [Base Article: 15%].
Considering the current financial situations of both companies, investing in ASML might be a wise choice for the long term. Despite a slight revenue increase projected for 2024, ASML's financial health is strong, evidenced by its robust balance sheet and gross profit growth. Furthermore, ASML's monopoly in EUV lithography technology provides it with a competitive advantage in the market, especially in sectors like AI and electric vehicles that heavily rely on semiconductors [Enrichment Data: 1%]. On the other hand, Wolfspeed's stock price plummeted due to its cyclical industry challenges and financial instability, including a significant debt burden and a decrease in revenue and gross profit [Base Article: 35%].
Given these factors, ASML's more secure financial position and monopoly in EUV lithography technology suggest a better long-term investment opportunity. However, it's essential to conduct thorough research and consider consulting with a financial advisor before making investment decisions.
