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 Gainers📈 & Losers📉

Our Biggest Gainers & Losers of the Day in the $100,000 Build Portfolio

For the 15th October 2024:

• Where Did $50 BILLION Go?!😲

Where Did $50 BILLION Go?!😲 

I had to double take this morning. Then rub my eyes & check one more time.

Europe’s largest tech stock finished down over 15.5% to end the European session & fell lower than 17% in some parts of the US session.

When a stock worth hundreds of billions of dollars loses over $50 billion of value in a day it leaves me with a couple of questions. First….. what the hell happened?!😲 

Then when I’ve figured that out, it’s “Is the market overreacting here?” & “Is there money to be made or is it a falling knife?”.

Let me answer those for you. 👇️

So what’s actually happened? 🤔 

ASML are probably the biggest tech company you’ve never heard of…. so who are they?

They’re a Dutch company behind the machines used by companies like Intel & TSMC to create top notch semiconductor chips, which power everything from smartphones to AI systems.

Today they’ve face-planted on the trading floor.

ASML accidentally released their third-quarter results a day early. 😬 That’s pretty bad, but hold on, that’s not all. Their results were way worse than expected.

I think the market could’ve taken an accidental earnings release on the chin if the results were decent. Or even a bad earnings report when it was supposed to be released. But combine the two & it’ll make billions of dollars disappear faster than the candy floss this raccoon is trying to wash….

So just how bad is bad?

Turns out, ASML’s customer orders were half of what analysts were hoping for. Investors were ready for a €5B order intake, but ASML only pulled in €2.6B. That’s a massive miss.

CEO, Christophe Fouquet, said things aren’t looking too hot for next year either. They had to dial back their revenue forecast for 2025, going from a possible €40B down to a max of €35B. And the gross margin? Yep, you guessed it. That’s lower too. Basically, they’re saying the recovery in semiconductors is going to be a slow burn, outside of the smoking hot AI space.

Why has everything slowed down? 📉 

So why have ASML missed so badly? And why are they pumping the brakes on forecasts over the next 12 months?

Part of the blame can be on other big companies not doing their part. Intel & Samsung have been struggling. Intel is slashing costs after a bad earnings report. Samsung’s falling behind in AI chips. That’s bad news for ASML, since these guys are big customers.

Oh & did I mention China?

ASML said they’re expecting a big drop in sales to China next year. You can thank the US & Dutch governments for that one. They’re restricting ASML’s ability to send their top-tier machines to China. Chinese companies are welcome to the older tech for simpler chips but the high-end stuff is off-limits.

Less demand from China = another headache for ASML.

Is there any money to be made from this?💰️ 

You might think I’m crazy but I’m gonna say…. yes!

Hear me out.

I know it looks bad on the surface from the news today & the most recent earnings but this is a growing space. Look at the revenue for the last 10 years.

Revenue has been growing year on year for nearly a decade now. And they haven’t said the growth has stopped. They’re just saying it’ll be slower. Reigning the expectations in a little.

And do you know why I’m so confident ASML will keep growing?

It has a monopoly in EUV lithography. Techy, I know. If you’re not a computer nerd, all you need to know is it’s a must-have for making the most advanced chips.

As AI, 5G, & advanced computing grow, so does demand for ASML's machines. And the CEO confirmed AI demand isn’t slowing down, they just need the other sectors to catch up.

And I’m pretty confident it’ll catch up.

Long-term semiconductor demand isn’t going anywhere in tech sectors like smartphones & EVs. With a customer base like TSMC, Intel, & Samsung, plus solid margins and cutting-edge R&D, I really struggle to see a world where I didn’t just get a 15% discount today.

Granted, my position did take a hit today. ASML currently makes up 0.7% of my portfolio. I’m going to take advantage of the dip & double up on my position size to bring my average cost down.

Orders set for market open tomorrow 🤞 

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That’s all! See you same time tomorrow 👋 

P.S Hit reply & let me know what you thought of today’s newsletter. All feedback is welcomed ❤️