Episode Details

ASML Holding (ASML) Q2 2026 — ASML Holding (ASML) — the sole maker of EUV lithography machines, essential to every advanced AI chip — reported a clean Q2 2026 beat: net sales €9.3B, a 54.0% gross margin (above guidance), and €2.9B net income (EPS €7.59). It RAISED its 2026 outlook to €43-45B sales at 54-56% gross margin, guided Q3 to €11-12B, and said it has substantially all the orders it needs for 2027 (while adding ~30% EUV capacity). It bought back €1.1B of stock. Yet the ADR (~$1,785, ~11% off its ~$2,000 high after more than doubling off its low) slipped — an expectations/valuation story, not a fundamentals one. ASML is the closest thing to a true monopoly in technology: the only company on earth that makes EUV lithography machines, the tools every leading-edge AI chip is built on. In Q2 2026 it beat (€9.3B sales, 54% gross margin, €2.9B net income) AND raised its full-year outlook (€43-45B sales, 54-56% GM) — yet the stock fell, because after more than doubling off its low it's priced for perfection at ~40x forward earnings. The order book answers the cycle worry: 2027 is essentially sold out, ASML is adding ~30% more EUV capacity, and High-NA is ramping (Intel in production). Demand is the AI supercycle — logic and DRAM memory both flow through ASML's one toll booth. It's a cash machine too (€1.1B buyback in the quarter, growing dividend). Our owner-earnings work lands near $2,050 (vs $1,785), below the Street's ~$2,300 but real upside. Our call: BUY, 3/5 — the AI supercycle's one true monopoly, at a fair-not-cheap price; add on cyclical dips. Not financial advice. THE CALL: BUY (3/5, THE AI SUPERCYCLE'S ONE TRUE MONOPOLY) — base-case value ~$2050 vs ~$1785 today. What to watch: the 2028 order book filling in the way 2027 already has (pushing the cycle worry further out), continued High-NA EUV adoption, and using cyclical or China-headline pullbacks toward the mid-$1,600s to add Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.