ASML Holding (ASML)

In the semiconductor space, you could probably look a little further down the food chain, perhaps at some of the equipment suppliers like this one.

Very good company. He likes this space which is on a cyclical upswing. A concern is the US chips act against China. Likes ASML, but on a pullback.

There are probably 4 in this category of semiconductor equipment suppliers. LRCX does design, manufactures the equipment, refurbishes and services the equipment. 12-month price target of $1069, decent runway. Reports soon. Very conservative, so we won't get surprised. 

ASML using ultraviolet to etch chips has become the cat's meow, carving out a nice niche for EUVs. It's a bit cheaper. Reported last week, positive on top and bottom lines but lowered guidance. It sees demand coming back very strong in second half. Semis are a big thing with the AI revolution. Opportunity to buy a fantastic company at a cheaper price. 12-month price target of $1070.

For new money, put half in each.

He trimmed it this morning after shares plunged 8% after they reported a miss that was larger than the street expected and guidance was soft. If the market were better, he would nibble at these levels, but not now. He remains confident in it and expects it to come back, because their tech is critical to AI. It's a show-me story.

Wants to trim, because it's had a such a big run like all semis (overbought sector). ASML trades over 40x PE. 

The future is bright for this, but not cheap now. Trades at 46x forward PE. They're sold out of product this year, maybe 2025 too.

12-month price target of $1070, very decent runway. King of extreme, ultraviolet lithography that etches on chips. Its technology has been ignited by AI. Sells equipment to TSMC, INTC, or a Samsung. Beat on top and bottom in January by a lot, guided down quite a bit.  

Massive margins and a monopoly, exactly the type of company that Warren Buffett says to buy. Gross margin is 49%, makes money hand over fist. Special dividend in January. Yield is 0.8%.

Makes the machines that make the chips. Crucial role, especially for advanced chips. Close to a monopoly. AI, automotive technology, 5G. All this will lead to stronger revenue and earnings growth. Potential breakout above 2021 high today. Beat expectations. 17% earnings growth going forward. Yield is 0.9%.

It is good to pay more for a stock when it is moving higher to its breakout level or even higher since this confirms an accurate thesis. If it pushes through its breakout level then the higher price can become the new breakout level. Upward momentum is good.

A main supplier to TSM. Beat handily on both top and bottom lines, raised guidance. Gross margin is 52%. Buy in thirds here, at $650, and at $620.

A Dutch company, making very small mirrors for semiconductor manufacturing. Has done well over the long term. He added this year as a way to play AI.

They have a monopoly in lithography semiconductor equipment. But they've been restricted in selling to China. To enter, yes buy now and more at $630 and $600.

Cutting-edge semiconductor technology. Provides equipment to TSM, Samsung, and INTC. Trades at 9.9x price to sales. Compare that to NVDA. Dominant in the space. The one behind the scenes to create the technology for AI, 5G, and cloud computing. Strong revenue expansion and ROIC. Good earnings growth. Beat expectations and boosted guidance. Yield is 0.91%.

Both great but different businesses, and great as long-term holds. Decide what end-market you're targeting to make your choice.

ASML makes cutting-edge machines that cost $100s of millions per unit. Concerns in the near term about China and the tit-for-tat going on. Risk that orders will be pushed back. Long-term, still likes a lot. Quite expensive, more of a monopoly.

GOOG is still one of his favourites. May just have the best AI capabilities in the world, despite OpenAI and the MSFT partnership, and that will continue to power through. Not expensive.

Semi-conductor business very strong with rise of A.I.
Long history of performance.
Wide variety of products that support economy.
"Moore's Law" very good for future of chip business.
Service style business for tech industry. 
Large revenue growth in Asia markets. 
Trading at 1.3 PE/Growth ratio - cheap compared to peers.