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]

Core Viewpoint - Stock splits have become popular in the technology sector as companies aim to make their shares more accessible to a broader range of investors, with ASML potentially considering a split in 2025 due to its underperformance compared to the market [1][3]. Company Overview - ASML has executed four stock splits since going public in 1995, with the last being an 8-for-9 reverse split in 2007 [4]. - The company's stock price has increased over 1,900% since the last split, currently trading around $764, indicating a potential for another split [5]. Recent Performance - ASML's stock has underperformed, gaining only 22% over the past couple of years compared to a 94% increase in the broader semiconductor sector [3]. - The company faced challenges in the second half of 2024, including concerns over sales restrictions to China and weaker-than-expected orders [6]. Revenue Guidance - ASML's 2025 revenue guidance is between 30 billion euros and 35 billion euros ($31.1 billion to $36.3 billion), which is on the lower end of previous forecasts [7]. - Management maintains a long-term growth outlook, supported by catalysts such as AI, with a 2030 revenue target of 44 billion euros to 60 billion euros [8]. Growth Projections - Assuming ASML achieves the midpoint of its 2025 guidance, the company could see a compound annual growth rate (CAGR) of nearly 10% over the next five years [8]. - The gross margin is expected to improve from 51%-53% in 2025 to 56%-60% by 2030, indicating potential for increased profitability [9]. Market Demand - Demand for ASML's extreme ultraviolet (EUV) lithography systems is projected to remain strong, with chipmakers expected to increase spending at a double-digit CAGR from 2025 to 2030 [10]. - The EUV lithography market is estimated to generate $22.7 billion in annual revenue by 2029, up from $12.2 billion last year, with ASML holding a near-monopoly in this space [12]. Earnings Forecast - Analysts predict a 26% increase in earnings per share (EPS) for ASML in 2025, following an estimated 4% decline in 2024 [13]. - The company is expected to maintain earnings growth of 25% or more in 2026, with the stock trading at 31 times forward earnings, slightly below the Nasdaq-100 index's multiple of 32 [14].

Investment Strategy - The investment strategy focuses on high-quality businesses with strong historical bottom-line growth rather than turnarounds [1] - The portfolio targets blue-chip companies with wide moats, competitive advantages, industry-leading market share, and profitability [1] - Companies are selected based on attractive valuations relative to forward growth across US and European markets [1] - Dividend investing is primarily about free cash flow rather than yield chasing [1] Portfolio Composition - The portfolio includes long positions in LVMH and ASML through stock ownership, options, or other derivatives [1] - The strategy aims for strong capital appreciation and aggressive dividend growth [1] Analyst's Role - The analyst leverages their role as a Financial Analyst at a Fortune 500 firm to build a market-beating portfolio [1] - The investment horizon is 30 years until retirement [1]

Core Viewpoint - A class action lawsuit has been filed against ASML Holding N.V. and certain senior executives for alleged violations of federal securities laws, particularly concerning misleading statements about the impact of new export controls on the company's financial outlook [1][2][3]. Group 1: Lawsuit Details - The lawsuit is pending in the U.S. District Court for the Southern District of New York, titled Matar v. ASML Holding N.V., et al., No. 24-cv-9908 [2]. - Investors have until January 13, 2025, to request to be appointed to lead the case [2]. Group 2: Company Performance and Allegations - ASML is a key supplier in the semiconductor industry, providing photolithography machines essential for chip manufacturing [3]. - The complaint alleges that ASML misled shareholders by claiming that new export controls would not materially affect its financial outlook and that sales recovery was on track [3]. Group 3: Financial Impact - On October 15, 2024, ASML reported earnings significantly below expectations, attributing this to a slower-than-anticipated market recovery, resulting in a 16% drop in stock price from $872.27 to $730.43 per share [4]. - Following an earnings call on October 16, 2024, where the company cited cautious customer behavior and declining sales to China, the stock price fell an additional 6.4%, closing at $683.52 per share [5].

Core Viewpoint - A class action lawsuit has been filed against ASML Holding N.V. and certain senior executives for alleged violations of federal securities laws, claiming misleading statements regarding the impact of new export controls on the company's financial outlook [1][2][3]. Group 1: Lawsuit Details - The lawsuit is pending in the U.S. District Court for the Southern District of New York, titled Matar v. ASML Holding N.V., et al., No. 24-cv-9908 [2]. - Investors have until January 13, 2025, to request to be appointed to lead the case [2]. - The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of investors in ASML ordinary shares, call options, and/or put options [2]. Group 2: Company Performance and Market Reaction - ASML is a key supplier in the semiconductor industry, providing photolithography machines essential for chipmakers [3]. - On October 15, 2024, ASML reported earnings significantly below expectations, attributing this to a slower-than-expected market recovery, leading to a 16% drop in stock price from $872.27 to $730.43 per share [4]. - During the earnings call on October 16, 2024, ASML indicated that the decline in sales to China would negatively affect gross margins, resulting in a further 6.4% decline in stock price to $683.52 per share [5].

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]. Group 1: Allegations - The complaint alleges that ASML's management misrepresented the severity of issues faced by suppliers in the semiconductor industry [1]. - It is claimed that the recovery pace of sales in the semiconductor industry was slower than publicly acknowledged by ASML [1]. - The defendants allegedly created a false impression of having reliable information on customer demand and growth while downplaying risks from macroeconomic fluctuations and regulatory restrictions [1]. - As a result, the statements made by ASML regarding its business operations and prospects lacked a reasonable basis [1]. Group 2: Class Action Details - The class period for the lawsuit is defined as January 24, 2024, to October 15, 2024 [1]. - Shareholders are encouraged to register for the class action by January 13, 2025, to be eligible for potential recovery [2]. - Participants will be enrolled in a portfolio monitoring system to receive updates on the case's progress [2]. Group 3: Law Firm Background - The Gross Law Firm is recognized nationally for its commitment to protecting investors' rights against deceit and illegal business practices [3]. - The firm aims to ensure companies adhere to responsible business practices and seeks recovery for investors affected by misleading statements [3].

Stock Analysis - ASML Holding N V is rated a strong buy despite a recent 30% dip in stock price over the last 6 months indicating short-term weakness [1] - The analysis is based on growth prospects and uses the Discounted Cash Flow (DCF) model for valuation providing insights into cash flow generation under different business models [1] Analyst Information - The analysis is conducted by the HedgeMix team and associated with SA analyst Garvit Bhandari [1] - The article is written by Winfred Mwiti part of the HedgeMix team [2]

Core Viewpoint - Innovations in microchips are essential for modern technology, making the semiconductor industry a critical investment area with promising stocks like Nvidia, Taiwan Semiconductor Manufacturing, and ASML [1] Nvidia - Nvidia is a leading chip company known for its GPUs, which dominate the AI computing market, resulting in significant growth over the past two years [2] - The company plans to increase production of its next-generation Blackwell architecture in 2025, benefiting from rising data center spending to meet AI demand [3] - Analysts project a 51% growth for Nvidia in fiscal 2026, with a market capitalization of $3.4 trillion, indicating strong potential despite a slower growth rate compared to previous years [4] - With a revenue growth rate of 50%, Nvidia's valuation at 54 times trailing earnings is considered reasonable, making it an attractive investment opportunity [5] Taiwan Semiconductor Manufacturing (TSMC) - TSMC serves as a chip foundry for Nvidia and other competitors, positioning itself as a key player in the AI sector [6] - The company anticipates a tripling of AI-related revenue in 2024, contributing to a mid-teens percentage of overall revenue, indicating substantial growth potential [7] - TSMC is set to launch its 2-nanometer chips, which promise improved power efficiency and reduced operating costs for AI computing [8] - Trading at 23 times forward earnings, TSMC is viewed as a compelling stock to consider for investment [8] ASML - ASML holds a monopoly in providing extreme ultraviolet lithography machines essential for chip manufacturing, making it a unique player in the industry [9] - Export bans imposed by Western governments to curb China's technological advancement have impacted ASML, leading to a reduction in 2025 revenue guidance from €30-40 billion to €30-35 billion [10][11] - Despite these challenges, ASML's long-term growth outlook remains strong, with unchanged revenue guidance for 2030 projected between €44 billion and €60 billion [11] - The company's technology is difficult to replicate, positioning ASML as a long-term winner in the semiconductor sector, and the current stock price decline presents a potential buying opportunity [12]

Core Viewpoint - Investors in ASML Holding N.V. have the opportunity to lead a securities fraud class action lawsuit due to alleged misleading statements regarding the semiconductor industry's challenges and the company's performance [1][2]. Summary by Relevant Sections Lawsuit Details - The lawsuit alleges that from January 24, 2024, to October 15, 2024, ASML's management failed to disclose severe issues faced by suppliers in the semiconductor industry, which were more significant than indicated [2]. - It is claimed that the recovery pace of sales in the semiconductor industry was slower than publicly acknowledged by ASML [2]. - The complaint states that ASML created a false impression of having reliable information on customer demand and growth while downplaying risks from macroeconomic fluctuations and stricter export regulations on semiconductor technology [2]. - As a result, the positive statements made by ASML regarding its business and prospects were materially misleading and lacked a reasonable basis [2].

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]. Group 1: Allegations - The complaint alleges that ASML's management provided materially false and/or misleading statements about the severity of issues faced by suppliers in the semiconductor industry [1]. - It is claimed that the recovery pace of sales in the semiconductor industry was slower than publicly acknowledged by ASML [1]. - The defendants allegedly created a false impression of having reliable information on customer demand and growth while downplaying risks from macroeconomic fluctuations and stricter export regulations [1]. - As a result, the statements made by ASML regarding its business, operations, and prospects lacked a reasonable basis [1]. Group 2: Class Action Details - The class period for the lawsuit is defined as January 24, 2024, to October 15, 2024 [1]. - Shareholders are encouraged to register for the class action by January 13, 2025, to participate in potential recovery [2]. - Once registered, shareholders will receive updates through a portfolio monitoring software throughout the case lifecycle [2]. Group 3: Law Firm Background - The Gross Law Firm is a nationally recognized class action law firm focused on protecting investors' rights against deceit and illegal business practices [3]. - The firm aims to ensure companies adhere to responsible business practices and seeks recovery for investors who suffered losses due to misleading statements [3].