Stock Performance - ASML closed at $756 33, up 0 81% from the previous session, lagging behind the S&P 500's 1% gain but outperforming the Dow's 0 78% and Nasdaq's 1 51% [1] - Over the past month, ASML shares gained 5 63%, outperforming the Computer and Technology sector's loss of 4 13% and the S&P 500's loss of 2 14% [1] Earnings and Revenue Expectations - ASML is expected to report earnings of $7 19 per share on January 29, 2025, marking a 28 39% year-over-year growth [2] - Revenue is anticipated to be $9 76 billion, a 25 3% increase from the same quarter last year [2] Analyst Revisions and Zacks Rank - Recent revisions to analyst forecasts reflect near-term business trends, with upward revisions indicating positivity towards ASML's operations and profitability [3] - ASML currently holds a Zacks Rank of 4 (Sell), with the consensus EPS projection remaining stagnant over the past 30 days [5] Valuation Metrics - ASML's Forward P/E ratio is 29 77, higher than the industry average of 27 47, indicating a premium valuation [6] - The company's PEG ratio is 2 33, lower than the industry average of 2 68, suggesting a relatively better valuation considering earnings growth [7] Industry Overview - The Semiconductor Equipment - Wafer Fabrication industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 221, placing it in the bottom 12% of all industries [8] - The top 50% of industries outperform the bottom half by a factor of 2 to 1, based on the Zacks Industry Rank [8]

Core Insights - Taiwan Semiconductor's recent earnings report highlights significant financial performance and management commentary [1] Financial Performance - The earnings report indicates a notable increase in revenue and profitability, reflecting strong demand for semiconductor products [1] - Specific figures regarding revenue growth and net income were not detailed in the provided content [1] Management Commentary - Management provided insights into market trends and future expectations, emphasizing the company's strategic positioning in the semiconductor industry [1] - The commentary suggests a positive outlook for the company's growth trajectory, driven by technological advancements and market demand [1]

Core Viewpoint - ASML Holding has underperformed compared to the broader tech sector, raising concerns about its future prospects and potential investment decisions [1][2][14]. Financial Performance - ASML's Q3 2024 results showed net sales of €7.5 billion, an 11.9% year-over-year increase, and net income of €2.1 billion, up 9.7% [3]. - Earnings per share rose 9.8% to €5.28, indicating operational efficiency despite muted guidance for Q4 [3][4]. Guidance and Market Outlook - The company projects Q4 sales between €8.8 billion and €9.2 billion, with a gross margin of 49-50%, reflecting margin pressures [4]. - Management warned of weaker order intake in 2025 due to slow recoveries in mobile and PC markets, leading to downward revisions in earnings estimates by analysts [4][14]. Technological Developments - ASML's High NA EUV systems are crucial for advancing chip manufacturing, particularly for AI and high-performance computing, but their production costs are straining profitability [6][7]. - A 3.5% margin dilution is expected in Q4 due to ramp-up costs for High NA EUV production, with this trend likely to continue [7]. Geopolitical and Macroeconomic Risks - Geopolitical tensions, particularly with China, pose significant risks, as 47% of ASML's lithography shipments were to China in Q3 2024 [8]. - Macroeconomic challenges, including inflation and a sluggish recovery in mobile and PC markets, further complicate ASML's situation [9]. Valuation Concerns - ASML's forward 12-month P/E ratio stands at 28.46X, higher than the sector average of 26.32X, indicating a premium valuation that limits immediate upside potential [10][13]. - The stock has a Zacks Value Style Score of D, suggesting a stretched valuation, making it less attractive for value or growth investors [13]. Conclusion - Given the significant near-term challenges, including weaker guidance, profitability pressures, geopolitical risks, and macroeconomic headwinds, ASML appears overextended [14][15]. - Investors are advised to consider selling ASML shares and reallocating capital to better-performing or undervalued opportunities in the tech and semiconductor sectors [15].

Group 1 - ASML shares increased by 5% following positive guidance from its largest customer, TSMC, which reported better-than-expected fourth-quarter earnings [1][3] - ASML holds a dominant position in the DUV lithography market and a monopoly in EUV lithography, making it crucial for TSMC's chip production [2] - TSMC's projected capital expenditures are set to rise from $30 billion in 2024 to approximately $40 billion in 2025, indicating strong future demand for ASML's equipment [3][4] Group 2 - TSMC's capital expenditures will include new equipment purchases, which are essential for maintaining top-tier production capabilities [4] - TSMC's optimistic outlook suggests that ASML's EUV technology will become increasingly vital for the chipmaker in the coming years [5] - TSMC anticipates a doubling of sales for AI accelerators in 2025, following a tripling in 2024, positioning ASML for potential recovery after a volatile year [5]

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Group 1 - ASML's stock closed at $727.41, down 1.57% from the previous trading day, underperforming the S&P 500's gain of 0.16% [1] - Over the past month, ASML's shares increased by 2.84%, outperforming the Computer and Technology sector, which declined by 1.29%, and the S&P 500, which fell by 2.2% [1] Group 2 - ASML is set to release its earnings report on January 29, 2025, with an expected EPS of $7.19, representing a 28.39% increase year-over-year, and projected revenue of $9.76 billion, reflecting a 25.3% rise from the same quarter last year [2] Group 3 - Recent adjustments to analyst estimates for ASML indicate changing business trends, with positive revisions suggesting optimism about the company's outlook [3] - The Zacks Rank system, which assesses estimate changes, has shown a correlation with stock price performance, with ASML currently holding a Zacks Rank of 4 (Sell) [4][5] Group 4 - ASML's Forward P/E ratio is 29.32, higher than the industry average of 27.24, indicating that ASML is trading at a premium [6] - The company has a PEG ratio of 2.3, compared to the Semiconductor Equipment - Wafer Fabrication industry's average PEG ratio of 2.66 [7] Group 5 - The Semiconductor Equipment - Wafer Fabrication industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 218, placing it in the bottom 14% of over 250 industries [8]

Core Viewpoint - The Gross Law Firm has issued a notice to shareholders of ASML Holding N.V. regarding a class action lawsuit due to alleged misleading statements and omissions related to the semiconductor industry [1][2]. Summary by Relevant Sections Allegations - The complaint alleges that ASML's management made materially false and/or misleading statements during the class period from January 24, 2024, to October 15, 2024. Key points include: - The issues faced by suppliers in the semiconductor industry were more severe than indicated [1]. - The recovery pace of sales in the semiconductor industry was slower than publicly acknowledged [1]. - Defendants created a false impression of having reliable information on customer demand and growth while downplaying risks from macroeconomic fluctuations and stronger export regulations [1]. - Consequently, the statements made about ASML's business, operations, and prospects lacked a reasonable basis [1]. Next Steps for Shareholders - Shareholders who purchased ASML shares during the specified timeframe are encouraged to register for the class action. Registration includes enrollment in a portfolio monitoring software for status updates [2]. Firm's Mission - The Gross Law Firm aims to protect investors' rights against deceit, fraud, and illegal business practices. The firm is committed to ensuring responsible business practices and seeks recovery for investors who suffered losses due to misleading statements or omissions by companies [3].

Core Insights - Microsoft plans to invest $80 billion in global data centers this year, indicating strong ongoing investment in AI infrastructure [1] - The demand for AI chips is surging, with companies like Nvidia and Broadcom expecting deployments of AI chip clusters exceeding 1 million [1] Semiconductor Industry - Taiwan Semiconductor (TSMC) is a leading contract manufacturer benefiting from the AI chip boom, reporting a 36% revenue increase to $23.5 billion and a 50% rise in earnings per ADR to $1.94 [5] - TSMC's gross margin improved to 57.8% from 54.3% year-over-year, reflecting its pricing power amid competitors' struggles [6] - TSMC's stock is attractively valued with a forward P/E ratio of 19.5 and a PEG ratio of 0.65, indicating potential undervaluation [7] Equipment Manufacturing - ASML is the leader in extreme ultraviolet (EUV) lithography, essential for advanced chip manufacturing, with machines costing over $200 million [8] - ASML's next-generation high-NA EUV machines are priced around $380 million, with Intel and TSMC beginning to explore these technologies [9][10] - ASML holds a monopoly in the EUV market, positioning it for long-term success despite the delayed adoption of its latest technology [10][14]

Company Performance - ASML's stock has increased by more than 5% since October last year, outperforming the S&P 500's gain of over 2% [3] Analyst Background - The author, Yiannis Zourmpanos, is the founder of Yiazou IQ, an AI-driven stock research platform [3] - The author has a background in external/internal auditing and consulting, having worked at Deloitte and KPMG [3] - The author holds a Chartered Certified Accountant qualification and is a Fellow Member of ACCA Global, with BSc and MSc degrees from U.K. business schools [3] Investment Strategy - The investment approach focuses on GARP/Value stocks, targeting high-quality, reasonably priced businesses with strong moats and significant growth potential [3] - The strategy prioritizes fundamentals and seeks stocks trading at a discount to intrinsic value, with a clear margin of safety [3] - The long-term investment horizon is 5-7 years, aiming for wealth accumulation through compounding while emphasizing downside protection [3] - The strategy sometimes takes contrarian views during market uncertainties [3]

AI Stocks Overview - The AI sector has attracted significant investor interest due to its potential for high returns, though determining return potential is challenging given the recent run-up in AI-related stocks [1] Key Players in AI Hardware - ASML and TSMC are critical to AI hardware manufacturing, with ASML holding a monopoly on extreme ultraviolet (EUV) lithography, essential for advanced chip production [2][3] - TSMC relies on ASML's technology to produce advanced chips for clients like Nvidia, AMD, and Qualcomm, despite competition from Samsung and Intel [5] Market Position and Competition - ASML faces potential competition from Japanese companies like Nikon and Canon, which are developing simpler and more cost-effective EUV lithography technology [4] - TSMC dominates the foundry market with a 62% share, making it indispensable despite geopolitical pressures to relocate chip production [6] Financial Performance - ASML reported €19 billion ($19.6 billion) in revenue for the first three quarters of 2024, a 6% yearly decline, with net income dropping to €4.9 billion ($5.0 billion) [8] - TSMC reported $63 billion in revenue for the same period, a 32% yearly increase, with comprehensive income surging 33% to $26 billion [9] Valuation and Investment Potential - ASML has a higher P/E ratio of 39 compared to TSMC's 33, but ASML is currently cheaper relative to its five-year average P/E of 43 [10] - TSMC's higher-than-average earnings multiple of 33 is relatively inexpensive for an AI stock, supported by rapid revenue and earnings growth driven by the AI boom [12] Conclusion - TSMC is more likely to deliver higher returns due to its strong financial performance and growth trajectory, despite its higher valuation compared to ASML [11][12]