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To: Johnny Canuck who wrote (59902)9/7/2024 3:12:36 PM
From: Johnny Canuck
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To: Johnny Canuck who wrote (59903)9/8/2024 5:35:54 PM
From: Johnny Canuck
1 Recommendation   of 60910
 
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To: Johnny Canuck who wrote (59904)9/8/2024 9:40:54 PM
From: Johnny Canuck
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Wall Street is turning less bullish on tech darling ASML for several reasons
Published Sun, Sep 8 2024•7:35 PM EDT


Ryan Browne @Ryan_Browne_

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Analysts at major Wall Street banks are getting more cautious on chip darling ASML , raising concerns about the critical chip equipment maker’s demand outlook. Earlier this week, investment bank UBS downgraded ASML to “neutral” and cut its price target on the stock to 900 euros ($1,000.78) from 1,050 euros previously. In the note, UBS said that it expects to see a “plateau in litho intensity,” or the percentage of cost associated with lithography tools versus other wafer fabrication equipment tools, in both logic and memory chips. ASML is behind a key technology involved in chip manufacturing known as EUV, or extreme ultraviolet lithography. The company’s EUV machines generate a short wavelength of light in large quantities to print small, complex designs on microchips. These tools are critical pieces of equipment for the semiconductor industry, with major firms ranging from TSMC to Intel relying on ASML’s technology to produce their chips. Other Wall Street banks have subsequently come out with their own respective analyses on ASML — and they’re more downbeat than they were before. Morgan Stanley followed UBS in cutting its price target for the shares to 925 euros, down from a previous 1,000 euros and removed ASML from its basket of “top pick” stocks. The bank’s analysts stressed that they still view ASML as a “growth cyclical name with high-quality earnings,” but that its valuation may have “peaked” at 30 to 35 times its price-to-earnings ratio in July. Still, the stock “can re-rate from here, we believe, as rewards outweigh risks,” Morgan Stanley said. Morgan Stanley analysts added that, though artificial intelligence infrastructure spending remains high, ASML could be vulnerable to an “unwind of inflated expectations” related to the technology. ASML had been a key beneficiary of the AI momentum earlier this year, with the stock climbing as much as 50% from the start of the year to a peak of 1,002 euros at one point in July. However, ASML has seen considerable declines since then, falling nearly 30% from its all-time high. On Friday, analysts at Bank of America cut their price target on ASML shares to 1,064 euros from 1,302 euros previously, citing “lower EBITDA [earnings before interest, taxes, depreciation, and amortization] estimates and lower multiples.” The bank remains bullish on the stock, though, keeping ASML in its top pick for EU semiconductor equipment stocks. “We see the recent pull back as particularly enhanced buying opportunity,” analysts at the bank said. Uncertainty over adoption of ‘High NA’ tool One thing analysts have raised concern on was the timeline for adoption of ASML’s next-generation “High NA” EUV machines. NA stands for numerical aperture. These machines are expected to allow chipmakers to build even more sophisticated chips to power the next generation of electronic devices. In Morgan Stanley’s note, the bank said that it expects adoption of ASML’s High NA machines to be “lumpy,” and sees “risk of an ‘air gap’ in 2026, with ramp more likely in 2027-28.” Still, analysts at Morgan Stanley added that growth in cutting-edge logic and memory chips bodes well for ASML’s ongoing order book recovery this year. UBS cautioned ASML’s machines could face a slowdown in demand due to an “architecture shift” to gate all around architecture, or GAA. GAA refers to a transistor design that places a gate on all four sides of the channel of an electric current flow to improve a chip’s performance and power efficiency. Another key factor that may weigh on ASML is semiconductor firms re-using existing inventory of ASML EUV they already own to produce new chips, rather than buying fresh equipment. UBS suggested that this trend could be particularly heightened among memory chip firms. Several top memory chip makers work with ASML, including Samsung and Nvidia supplier SK Hynix. Morgan Stanley warned of a “slowdown in Installed Base Management (IBM) growth,” citing a potential peak in usage of its existing machines in the years 2025 and 2026. U.S.-China restrictions could apply demand pressure Meanwhile, ASML has also found itself the target of geopolitical headwinds. Another factor that top bank analysts cited in their caution on ASML was that U.S.-China tensions over trade and technology could exacerbate a possible slowing of China demand in the years ahead. “We expect semi-cap equipment vendors, including ASML, to remain optimistic on China demand through the rest of this year and into next,” Morgan Stanley analysts said in their note Thursday, adding they don’t expect a significant decline in China revenues next year, even as China declines in the overall sales mix. However, it said there are risks to the demand picture in China, namely a potential slowdown in demand in 2026 and possible changes to export restrictions that could further impact ASML sales over the mid-to-long term. On Friday, the U.S. government rolled out new export controls on critical technologies, including advanced chipmaking tools. The Biden administration had already previously imposed restrictions on exports of ASML’s advanced semiconductor equipment to China. Subsequently Friday, the Dutch government announced it would bring licensing requirements of ASML ‘s machines under its purview, effectively taking over control of the firm’s exports to China. The government said this move is aimed at defending Dutch national security. ASML said in a statement Friday that the latest measures mark a “technical change” that are not expected to have any impact on its financial outlook for 2024 or for its “longer-term scenarios.” Christophe Fouquet, CEO of ASML, said at a Citi conference in New York earlier this week that U.S.-led restrictions on the company have become more “economically motivated” over time, adding he expects more push-back on the curbs. In UBS’ note Wednesday, the bank said that it expects China spending on lithography machines to normalize “following a strong push towards localization in the context of trade tensions.” Analysts at the bank said they expect the share of ASML’s revenues that come from China to decline by 24% and 11% in 2025 and 2026, respectively. A great buying opportunity? Not all Wall Street banks have a downbeat view on ASML looking ahead. Investment bank Jefferies said in a note to clients earlier this week that, in contrast to UBS’ view, a move toward GAA architecture would do little to affect demand for ASML’s EUV machines. The bank said that lithography tools and GAA semiconductor architecture were “both two sides of the same coin.” The firm said in a follow-up note, following the fresh U.S. restrictions, that it saw weakness in ASML shares this week as “a great buying opportunity.” Jefferies added that it doesn’t see any impact from the U.S.-led trade curbs on ASML on the company’s outlook for 2025 and subsequent years.

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To: Johnny Canuck who wrote (59905)9/8/2024 9:48:49 PM
From: E_K_S
1 Recommendation   of 60910
 
perplexity.AI summary of the previous article:

Here is a one paragraph summary of the key points:

Several major Wall Street banks, including UBS, Morgan Stanley, and Bank of America, have become more cautious on semiconductor equipment maker ASML, citing concerns about potential plateaus in lithography intensity, lumpy adoption of its next-generation High NA EUV machines, and risks from U.S.-China trade restrictions and an architecture shift to gate all around transistors. UBS downgraded ASML to neutral and cut its price target, while Morgan Stanley removed the stock from its top picks. However, Bank of America still sees the recent pullback as a buying opportunity, and Jefferies believes the shift to gate all around architecture will have little impact on EUV demand. ASML's stock has fallen nearly 30% from its July peak amid the more cautious analyst sentiment.

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To: E_K_S who wrote (59906)9/9/2024 3:44:40 AM
From: Johnny Canuck
2 Recommendations   of 60910
 
Yes, there is realistically on a handful of companies that can afford to construction the next generation of fabs. With INTC having yield problems with its 3 nm fab and potentially reducing its cap ex, that is a problem for ASML who has a concentrated customer base. I think MU also modestly reduced cap ex which has raised some concern about AI demand because you need fast, next generation memory to inteface to AI chips.

>>>>>>>>>>>>>>>>>>>>>>>>

Perplexity overview of ASML role in making chiplets:

Now

What roles does the company with the stock symbol ASML play in the fabrication of chiplets for semiconductors.

What roles does the company with the stock symbol ASML play in the fabrication of chiplets for semiconductors.

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Answer

ASML plays a crucial role in the fabrication of chiplets and semiconductors overall through its advanced lithography systems. Here are the key aspects of ASML's involvement: Lithography Technology Provider ASML is the world's leading supplier of lithography systems used in the semiconductor manufacturing process

. Their lithography machines are essential for creating the intricate patterns on silicon wafers that form the basis of microchips, including chiplets. Extreme Ultraviolet (EUV) Lithography: ASML is the sole provider of EUV lithography systems, which are critical for producing the most advanced semiconductor chips with extremely small features. EUV technology enables the creation of chiplets with higher transistor density and performance. Deep Ultraviolet (DUV) Lithography: ASML also produces DUV lithography systems, which are used for less advanced chip layers and remain important in the overall semiconductor manufacturing process. Enabling Chiplet Manufacturing Chiplets require precise patterning and interconnects to function effectively when integrated into a larger package. ASML's lithography systems enable:
  1. Fine feature creation: The ability to produce extremely small transistors and circuits necessary for high-performance chiplets.
  2. Interconnect patterning: Precise creation of the connections between chiplets and within the package.
Advancing Semiconductor Technology ASML's continuous innovation in lithography technology directly impacts the capabilities of chiplet manufacturing: High-NA EUV: ASML is developing next-generation High-NA EUV systems, which will enable even smaller transistors (down to 1.5nm and beyond), potentially allowing for more advanced chiplet designs. Software Integration: ASML's systems incorporate advanced software that is crucial for achieving the precision required in modern semiconductor manufacturing, including chiplet production. Supporting the Ecosystem While ASML doesn't directly manufacture chiplets, its technology is fundamental to the entire semiconductor ecosystem that produces them:
  1. Enabling foundries like TSMC, Samsung, and Intel to manufacture chiplets and other advanced chips.
  2. Supporting the research and development of new chip architectures, including chiplet-based designs.
  3. Collaborating with a vast network of suppliers and partners to advance semiconductor manufacturing capabilities
  1. .
In summary, ASML's lithography systems are essential for creating the intricate patterns and structures required for chiplet fabrication, making the company a critical enabler of chiplet technology in the semiconductor industry.

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To: Johnny Canuck who wrote (59907)9/9/2024 4:31:30 AM
From: Johnny Canuck
   of 60910
 
Commodity Update

Natural gas short term rally potentially stalling.



Copper trying to set a higher low but still in a short and intermediate downtrend. Long term trend sideways.
Not exactly the elements of an expanding economy.



Timber is short term down and intermediate and long term sideways.



Platinum in an intermediate downtrend and long term sideways pattern. It is trying to rally short term but I expect it stall on the top of the intermediate downtrend channel or setup a breakout soon.



Energy is short term and intermediate downtrend and interesting still in a modest long term uptrend.




Gold waiting short term and up in the intermediate and long term trend. Gold looks to be play on a move away from the USD.



Silver and gold decoupled. Silver in intermediate downtrend and long term uptrend.


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To: Johnny Canuck who wrote (59908)9/9/2024 4:45:42 AM
From: Johnny Canuck
1 Recommendation   of 60910
 

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To: Johnny Canuck who wrote (59909)9/9/2024 5:10:21 AM
From: Johnny Canuck
1 Recommendation   of 60910
 
Index update

Market sold off on weak employment growth numbers.

SP500 selling off on above normal volume. Today is the 4 th day down on the impulse. Expect an attempted rebound, counter rally on Monday or Tuesday.



DOW also sold off but because of the Wednesday counter rally the DOW is only on day 2 of the downward impluse.



DOW transports also on day 2 of the current impulse down. There are at least 1 to 2 more down day possible before a counter rally.



DOW utilities seeing some profit taking. Too soon to say if doubt is creeping on on the size of the cut.



TLT showing an above average volatile day with more range than normal but it finished where it closed so sellers balanced buyers. Traders are unsure of what is next.



USD needs to set a local higher high to negate the deadcat bounce.



COMPQ on day 1 of the current down impulse within a short term downtrend. Tech remains on the defensive.



Semiconductors follow the COMPQ trend but watch the 200 level. A break of the level triggers a key stop loss for a lot of traders.



Russell 2000 on day 3 on the downward impulse. Look for the counter rally on Monday or Tuesday.



Financials seeing some profit taking. Only day 2 of the downward impulse. There may be some more weakness early next week. Too early to tell but weakness in the economy starting to be priced in.



xxxxxx

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To: Johnny Canuck who wrote (59910)9/9/2024 5:15:22 AM
From: Johnny Canuck
   of 60910
 
AVGO call bottom of non-AI cheap sales, but to more normal demand levels???

ASML Holding NV Message Board - Msg: 34811381 (siliconinvestor.com)

AI revenue flat wit the previous quarter. That is not the growth analyst want to see. Mix 2/3 chip and 1/3 networking.

ASML Holding NV Message Board - Msg: 34811383 (siliconinvestor.com)

AVGO continuing to buy companies to drive growth. Long term in the era of no cheap money, I am not sure it is sustainable.

ASML Holding NV Message Board - Msg: 34811419 (siliconinvestor.com)

Accelerating deployment in AI in 2025, next q flat guidance is a short term issue

ASML Holding NV Message Board - Msg: 34811443 (siliconinvestor.com)

ASIC the future of AI chips not standalone products

ASML Holding NV Message Board - Msg: 34811455 (siliconinvestor.com)

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To: Johnny Canuck who wrote (59911)9/9/2024 6:28:22 AM
From: Johnny Canuck
   of 60910
 
No matter the era, the way technology plays out is similar It is fun to see the parallels to such old tech as tractors. AI are today's tractors of the 20th century. Industrial usages and everyone in the farming business needed to have one.


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