Many American tech stocks surged last year, as remote work and stay-at-home trends boosted demand for cloud services, software, and components for consumer electronics. The tech sector was also better insulated from the pandemic than many other sectors.

But over the past few months, that trend reversed as rising bond yields sparked a rotation from growth to value stocks. Investors also pivoted from pandemic stocks toward reopening plays, and many high-flying tech stock prices have plunged.

It's tempting to fish for bargains right now in the U.S. tech sector, but investors shouldn't overlook the international tech stocks that were also rattled by the same market rotation. Here are two growing overseas companies that deserve a closer look.

A digital illustration of a globe plugged into a circuit board.

Image source: Getty Images.

1. ASML

ASML (ASML 4.12%) is one of the world's most important semiconductor equipment makers. The Dutch company is the world's top supplier of photolithography systems, which etch circuit patterns into silicon wafers.

The world's most advanced chip foundries, including Taiwan Semiconductor Manufacturing (TSM 4.07%), Samsung, and Intel (INTC 1.79%), all use ASML's systems. ASML's top customer is TSMC, which can't produce its smallest 5nm and 7nm chips without using ASML's top-tier EUV (extreme ultraviolet) systems.

Therefore, ASML is just as crucial to resolving the global semiconductor shortage as TSMC. ASML doesn't face any meaningful competition in the EUV market, since it developed its technology over the past two decades, and it will launch even more powerful high-NA EUV systems within the next few years.

ASML's revenue and net income rose 18% and 37%, respectively, in 2020. It shipped its 100th EUV system in the fourth quarter and generated 43% of its revenue from those higher-margin systems for the full year. That growth continued throughout the first quarter of 2021.

For the full year, analysts expect ASML's revenue to rise 49% and 72%, respectively, as the world's top foundries all ramp up their spending to resolve the semiconductor crisis. A lot of that capex will likely be spent on ASML's systems. 

ASML's stock has more than doubled over the past 12 months, but it still looks reasonably valued at 35 times forward earnings and remains a solid all-around play on the semiconductor sector

2. Adyen

Adyen (ADYE.Y 0.44%) is a Dutch fintech company that gained a lot of attention after it replaced PayPal (PYPL 0.33%) as eBay's (EBAY 1.63%) payment processor. Adyen generated most of its revenue in Europe last year, but it has a growing presence in North America, Latin America, and Asia. In addition to processing online payments, Adyen helps merchants issue their own virtual payment cards and sells third-party POS (point of sale) systems.

A woman uses a mobile payments app.

Image source: Getty Images.

Unlike PayPal and Square (SQ -0.28%), Adyen doesn't offer any cryptocurrency transactions. It also doesn't provide native peer-to-peer payments like PayPal's Venmo or Square's Cash App. Instead, it provides tools that allow businesses to facilitate both peer-to-peer and business-to-consumer within their own apps.

In other words, Adyen is a simpler play on the growing fintech market than PayPal and Square, which have both expanded their ecosystems far beyond basic digital payments.

Adyen's revenue rose 28% to 684.2 million euros ($825.4 million) in fiscal 2020, as the shift to online sales during the pandemic offset its loss of payments at physical stores. Its earnings grew 11%, and its adjusted EBITDA increased 27% to 402.5 million euros ($485.6 million).

Analysts expect Adyen's revenue and earnings to grow another 41% and 62%, respectively, this year. That acceleration can be attributed to the reopenings of brick-and-mortar businesses, its expansion into new markets, and the final stages of eBay's three-year transition away from PayPal.

Adyen's stock isn't cheap at about 120 times forward earnings, but its long-term growth potential in a cashless world might justify that premium valuation.

The bottom line

American investors might not be familiar with European tech stocks, but companies like ASML and Adyen stand out as great overseas investments. ASML is a crucial cog in the global semiconductor market, and Adyen could still attract plenty of businesses that rely on traditional POS systems.