When ASML Holding (ASML) and Taiwan Semiconductor (TSM) posted strong quarterly results, shares fell. The rally likely failed because the stock market priced in the outsized growth and strong outlook.
Both companies are worth a closer look.
ASML posted revenue of EUR 9.33 billion, up by 21.3% Y/Y. Q2 GAAP EPS was EUR 7.59. For the third quarter, total net sales are between EUR 11.0 billion and EUR 12 billion. The stock suits long-term investors with a multi-year timeframe. ASML’s pricing power strengthens over longer periods. It has long order lead times with customers.
So long as the AI boom continues, EUV machines will benefit from strong demand.
TSM announced a $100 billion investment in the U.S. alongside its posted results. It reported a 33.7% Y/Y increase in revenue, to $40.2 billion. Its GAAP EPS topped $4.31. Gross margin was 67.7%.
TSM will step up its capital expenditure to support the megatrend in AI. Its multiyear timeframe is very strong. With the $100B spent in Arizona, the total investment is $265 billion.
TSM has support from the U.S. government and the South Korean market. Since it expects the AI compounded annual growth rate to continue over several years, TSM stock is for long-term investors. Most notably, the 2-nanometer process is growing at around 70% CAGR.
