Earnings and Analyst Outlook - ASML Holding NV is scheduled to report FY24 earnings on January 29, 2025, with a mixed outlook from analysts [1] - In the last 90 days, analysts have revised EPS estimates upwards 3 times and downwards 4 times, indicating uncertainty in the company's performance [1] Analyst Background - Michael Del Monte is a buy-side equity analyst with over 5 years of industry experience and a decade in professional services across various sectors including O&G, OFS, Midstream, Industrials, Information Technology, EPC Services, and consumer discretionary [1] - Michael employs a macro-value-oriented approach to investment analysis, leveraging cross-industry insights for investment recommendations [1]

Core Viewpoint - ASML Holding N.V. is expected to report fourth-quarter 2024 results on January 29, with anticipated revenues between €8.8 billion and €9.2 billion, reflecting a year-over-year increase of 25.3% [1][2]. Financial Performance - The Zacks Consensus Estimate for earnings is $7.18 per share, which is up 28.2% from the previous year's earnings of $5.60 [2]. - ASML has a history of earnings surprises, having outperformed the Zacks Consensus Estimate in the last four quarters with an average beat of 12.7% [3]. - Currently, ASML holds a Zacks Rank 4 (Sell) and has an Earnings ESP of -3.14%, indicating a lower likelihood of an earnings beat this quarter [4][5]. Industry Context - The semiconductor sector is experiencing a resurgence driven by increased demand and the transformative potential of AI, benefiting companies like ASML, particularly in the wafer fabrication equipment space [6]. - ASML is at the forefront of technological innovation, capitalizing on the industry's shift towards smaller, advanced technology nodes essential for AI, 5G, and high-performance computing [7]. Demand Dynamics - Demand for ASML's lithography tools is rising in both logic and memory markets, with a notable transition to next-generation memory technologies like DDR5 and high-bandwidth memory (HBM) [8]. - Heavy investments in Extreme Ultraviolet (EUV) technology are yielding positive results, with significant sales driven by the popularity of the NXE:3800 machine [9]. Challenges - Macroeconomic challenges, including U.S.-China trade tensions and export restrictions on advanced semiconductors to China, are likely to negatively impact ASML's quarterly outlook [10][11]. - ASML's stock has declined 17% over the past year, underperforming the Zacks Semiconductor Equipment - Wafer Fabrication industry's decline of 16.7% [12]. Valuation - ASML is currently trading at a forward 12-month P/E of 28.61X, which is almost in line with the industry average [14]. Investment Considerations - While ASML's EUV technology solidifies its industry leadership, the associated costs are burdensome, with management acknowledging a 3.5% margin dilution in the fourth quarter due to ramp-up costs for High NA EUV production [16][17]. - Geopolitical tensions and macroeconomic challenges, including inflation and sluggish recovery in mobile and PC markets, pose significant risks to ASML's revenue streams [18][19]. - A cautious approach is recommended for investors considering ASML stock, given the near-term challenges outweighing long-term potential [20].

Company Overview - Coatue Management, founded by Phillipe Laffont in 1999, has a public equities portfolio valued at approximately $26.9 billion, holding 81 stocks [2] - The firm has invested in successful tech start-ups such as TikTok, Snap, and Spotify [2] ASML Holding - Coatue sold its remaining 113,431 shares of ASML, exiting the position entirely [3] - ASML, which produces lithography machines essential for the AI industry, experienced an 8.5% stock decline in 2024, contrasting with the S&P 500's 23% gain [3][4] - The company faced challenges due to export restrictions to China, leading to a lowered revenue forecast for 2025, with expected revenue from Chinese clients at 20% [4][5] Chipotle Mexican Grill - Coatue initiated a position in Chipotle, purchasing over 4.5 million shares [6] - Chipotle reported a restaurant-level operating margin of 25.5% in Q3, down from 26.3% a year prior, but the stock rose nearly 32% in 2024 [7] - The company plans to add a record 285 to 315 new stores in 2024 and aims to double its North American restaurant total to 7,000 by 2030 [9] - Despite a high valuation at 45 times forward earnings, the company's growth and innovation in technology are seen as justifying the price [10]

Group 1 - A significant decline in artificial intelligence stocks, including Nvidia, occurred after Chinese startup DeepSeek launched an AI model that operates on less-advanced chips and at a lower cost than U.S. competitors like OpenAI [1][7] - DeepSeek's performance has been reported to be "on par with ChatGPT," despite U.S. export controls on advanced chips affecting Chinese AI companies [2] - Nvidia's shares fell by 11% in premarket trading, with other chipmakers like Taiwan Semiconductor Manufacturing Co. and Broadcom also experiencing declines of over 11% and around 12% respectively [3][7] Group 2 - Nasdaq futures dropped approximately 4%, with Meta Platforms down nearly 4% ahead of its earnings report [4] - Citi analysts maintained a buy rating on Nvidia, anticipating continued demand for advanced chips from AI companies [5] - Analysts expressed skepticism about DeepSeek's achievements being accomplished without advanced GPUs, suggesting that U.S. companies still hold an advantage in access to cutting-edge chips [6]

Core Viewpoint - Investors are optimistic about mega-cap stocks and those focused on artificial intelligence (AI), with analysts predicting continued momentum for these stocks over the next 12 months [1]. Group 1: Alibaba Group Holding - Alibaba Group Holding Ltd. is viewed positively by Wall Street, with an average 12-month price target indicating a potential upside of around 40% [2]. - A significant majority of analysts, 34 out of 41, rate Alibaba as a "buy" or "strong buy," reflecting strong confidence in the stock [2]. - The stock's valuation is attractive, trading below nine times forward earnings and having a PEG ratio of 0.57 based on five-year earnings growth projections [3]. - Analysts expect Alibaba to deliver stronger growth due to its expansion in payment and logistics services on Taobao and Tmall, as well as solid sales growth in its cloud unit driven by AI [4]. Group 2: ASML Holding NV - ASML Holding NV is projected to see a 24% increase in share price over the next 12 months, with 29 out of 39 analysts rating it as a "buy" or "strong buy" [6][8]. - The stock trades at a forward earnings multiple of 30 and has a PEG ratio of 1.96, indicating it is priced at a premium [6]. - ASML commands a 90% market share in photolithography equipment for semiconductors, and the rising demand for AI chips contributes to Wall Street's optimism [7]. Group 3: Salesforce - Salesforce is expected to have an upside potential of a little over 17%, slightly edging out Nvidia for the third spot among mega-cap AI stocks [9]. - Despite only an 8% year-over-year revenue growth in the third quarter, the company's earnings increased by approximately 25% [10]. - The bullish outlook on Salesforce is largely attributed to the potential of its Agentforce platform, which utilizes AI agents, driving increased customer interest [11].

Investment Strategy - Focuses on identifying growth investing opportunities with attractive risk/reward upside potential [2] - Combines sharp price action analysis with fundamentals investing [2] - Avoids overhyped and overvalued stocks while capitalizing on battered stocks with significant upside recovery possibilities [2] Investment Group - Runs the investing group Ultimate Growth Investing, specializing in high-potential opportunities across various sectors [3] - Focuses on ideas with strong growth potential and well-beaten contrarian plays, with an 18 to 24 month outlook [3] - Targets growth stocks with robust fundamentals, buying momentum, and turnaround plays at highly attractive valuations [3] Analyst Recognition - Recognized by TipRanks as a Top Analyst [1] - Recognized by Seeking Alpha as a "Top Analyst To Follow" for Technology, Software, and Internet, as well as for Growth and GARP [1] - Demonstrates outperformance with picks that generate alpha well above the S&P 500 [1]

Core Insights - Artificial intelligence is experiencing a significant transformation, with open-source organizations like DeepSeek reducing the costs associated with AI model development while the infrastructure required to operate these models remains expensive [1] Group 1: AI Development and Infrastructure - Open-source organizations are driving down the costs of AI model development [1] - The infrastructure needed to run free or inexpensive AI models is still very costly [1] Group 2: Expertise and Contributions - The article highlights the expertise of a DevOps Engineer with extensive knowledge in AI tools, machine learning algorithms, and model deployment [1] - The engineer is pursuing advanced AWS machine learning certifications to enhance their expertise in AI and machine learning [1] - Contributions to Seeking Alpha are made to share insights on AI and machine learning from an investment perspective [1]

Core Insights - The primary investment strategy focuses on buying high-quality companies at attractive valuations, emphasizing the importance of not timing the market perfectly but ensuring a good purchase price for potential gains [1]. Company Analysis - ASML Holding is highlighted as a stock of interest, indicating its potential as a high-quality investment opportunity [1].

Core Viewpoint - ASML is set to report its financial results on January 29, 2025, with expectations of significant year-over-year growth in earnings and revenue [2]. Group 1: Stock Performance - ASML's stock closed at $732.25, reflecting a decrease of 1.87% from the previous day, underperforming compared to the S&P 500, Dow, and Nasdaq [1]. - Over the last month, ASML's shares have increased by 4.24%, outperforming the Computer and Technology sector's gain of 1.8% and the S&P 500's gain of 2.52% [1]. Group 2: Earnings Estimates - Analysts expect ASML to report earnings of $7.17 per share, representing a year-over-year growth of 28.04% [2]. - The consensus revenue estimate for ASML is $9.76 billion, indicating a 25.3% increase compared to the same quarter of the previous year [2]. Group 3: Analyst Revisions and Rankings - Recent changes to analyst estimates for ASML reflect evolving short-term business trends, with positive revisions indicating optimism about the company's profitability [3]. - The Zacks Rank system currently rates ASML at 4 (Sell), with the Zacks Consensus EPS estimate having decreased by 0.17% in the past month [5]. Group 4: Valuation Metrics - ASML has a Forward P/E ratio of 29.66, which is higher than the industry average of 28.01, indicating that ASML is trading at a premium [6]. - The company has a PEG ratio of 2.33, compared to the industry average PEG ratio of 2.75, which also considers projected earnings growth [6]. Group 5: Industry Context - The Semiconductor Equipment - Wafer Fabrication industry, to which ASML belongs, is ranked 220 in the Zacks Industry Rank, placing it in the bottom 13% of over 250 industries [7]. - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7].

Core Insights - Oliver Rodzianko is an investment analyst with a focus on the technology sector, emphasizing value principles and resilient management [1] - His expertise includes AI, semiconductors, software, and renewable energy, targeting companies with lasting competitive advantages [1] - Rodzianko employs a value trading strategy at inflection points, typically holding investments for one to two years [1] Investment Strategy - The investment approach is characterized by a wealth-preservation portfolio and advanced risk-mitigation strategies to navigate recessions and market crashes [1] - The Rodzianko Asset Management Rating System categorizes investments into five ratings: Strong Buy, Buy, Hold, Sell, and Strong Sell, each with specific expected annual returns [1] - For value trading, a Strong Buy anticipates annual returns of 30% or above, while a Buy expects returns of 25% or above [1] - Long-term investments are expected to yield annual returns of 20% or above for Strong Buy and 15% or above for Buy [1] - The Hold rating anticipates returns of 15% or above for value trading and 10% or above for long-term investments [1] - Sell and Strong Sell ratings indicate lower expected returns, with Strong Sell anticipating zero or negative returns [1]