ASML Earnings "Couldn't be Any Better," How it Shakes Up Volatile AI Chip Trade

today. George, really appreciate you breaking all that down for us. And for the example trade that was George Tillis. Now I want to move to ASML. It had to beat this morning. Second quarter earnings on the top and the bottom lines with 54% gross margins. The Dutch semiconductor firm also raised its full year net sales forecast. As AI continues to drive chip demand. Joining us to take a closer look, Logan Gill and analyst at Joule Financial. And Nick Roach, the CEO of Earnings Scout. Great to have you both on. Logan. Let's start with you here. I mean I'm looking at ASML. They've given up pretty much all of their gains on great numbers. We had a second raise in terms of their guidance just this year. We've got the beats on the top and bottom line. They talked about record order visibility. Is this enough proof that the AI infrastructure buildout is in full swing, and why are we not seeing it reflected in the price action? Yeah, it's pretty amazing the move that it's had this morning. If you looked in the futures market or even looked at, it's a Dutch company. So you looked overnight, you could see that it was up pretty sizably up close to 5% at one point this morning in the premarket. And it's kind of sold off throughout the day. I, I'm hesitant to kind of put a blanket over it, but I think this could be a trend that we see throughout this earnings season, last earnings season, the drive by AI and the earnings reports is what drove the market higher and kind of got us out of the slump from the Iranian war. But I think we could see a little bit of a sell the news action that these great fantastic numbers are expected. What I do like about ASML is it's almost like the PPI data we got this morning. It's the top of the funnel. We're looking at the very first, who is going to ultimately lead down to like a Taiwan semi who is one of the biggest customers of ASML and are buying the machines that produce the semiconductor chips. That obviously trickles down to Nvidia or AMD. So seeing the top of the funnel of the AI trade and knowing that they have such a large demand is encouraging for the AI trade and does does tell you this is still in full swing. It's not going anywhere. But I think the market at this point is looking at these AI companies and going, yes, it's great. We expect great numbers, but is it truly enough? Investors are looking for in the armor. All right. And as we look at this, Nick, I want to get your thoughts here too, and your takeaways from these results. I mean, are we moving the the goalposts here? We're getting good numbers. We're getting proof. But it doesn't it's not enough. I think everyone is trying to head to the exits first, knowing that this could play out with the overspending and CapEx and valuations high like we had in the.com era in the late 90s. And what we're seeing is very different earnings trends today than what we saw towards the end of before the bubble collapsed. And I think people are running to the exits too soon. And the most negative thing I could say about ASML earnings this this morning would be from a bearish standpoint if I had to give one would be this is as good as it gets. It can't get any better, but as long as the trends are still improving and accelerating, you want to own these names. You want to own ASML. It's the premier picks and shovels play for AI plays. They got the only machines that do the, you know, the extreme ultraviolet light lithography to to make the Nvidia chips Broadcom and AMD. So this is still a play. And I think it's supportive of that. And people running for the exits are exiting prematurely. And Logan I want to I want to piggyback off of what Nick just said there about people running for the exits. And I know you highlighted your notes. Investors are looking for any cracks they can find in this AI trade. Did you see anything in the report that could indicate to you there are cracks that someone could latch on to? I really didn't. I mean, the report was about as flawless as it gets. And another raise for the future guidance was really the highlight of everything was the future raise as well. So there really wasn't much. I think more than anything it's the sentiment shift, just like the other guest was saying. I mean, if we look back a year ago Google meta Amazon they're all getting praised for their investment into AI. And if they had a ton of investment, or even if they raised their spend, the stock would go up on the news. But then we just saw a few weeks ago, meta saying that they didn't spend as much as what they were expecting to spend in AI, and they got praised for that. So they're starting to be a little bit of a shift in the sentiment overall for the AI trade and for the AI investments that these companies down the chain are making. But I think like the guest is saying, and we're not chasing or buying it here at these levels, but the ASML is an interesting play because the numbers are backing it. The numbers are backing the price action on the stock, and it's been really strong. I did not see in the armor in this report. And Nick, I want to follow up on something you said there. And not that you subscribe to the narrative, but you thought there was a possibility, just that people thought this was as good as it could possibly be. As we look at what we heard from the CEO, Christophe Fouquet, saying customers accelerating their CapEx spend because they have what he called unprecedented visibility. He also told us that they have EUV machine orders out through 2028. With that level of visibility, is that arguably one of the strongest signals that AI spending isn't peaking any time soon? I don't think it is. I said the bearish argument would be this is as good as it gets. That's the only argument you could see make after seeing these numbers. But there's no evidence that that's the case right now. The momentum is very powerful and we're not seeing anything slowing on a rate of change basis. And that's what we look at from the earnings expectations. And when they're improving, that's not what we see over the past 40 years. When we get to prior market tops, these have more run, more room to run. And as we look at ASML, it's giving up all of its gains actually trading negative. Now on the session following that report. Really appreciate you both. Joining us to break down those numbers. Logan Gilliland analyst at Juul Financial.