ASML Earnings Add Muscle to Global AI Story

anywhere free on Schwab network.com. We're back on Morning Trade live. Let's focus on the chart for ASML. Up around 120% year over year and nearly 70% year to date. We are trading higher right now, but slipping a bit, just hanging on to some fractional gains right now as semis are under pressure today. That is despite the company reporting some very nice earnings this morning. It did spark a global chip rally across Asia and Europe. So let's talk about this for the morning trade. Joining us for a closer look is Molly Kate. And just walk us through the numbers Molly because they seemed very solid very solid. Sam. And you just pointed out we have given up some of the gains. We were up about 3% on these numbers. Now we're just marginally in positive territory. But let's go through the numbers and also talk about ASML raising its guidance for the second time this year. For the second quarter, net sales came in at $10.84 billion. That was better than the 10.2 that was expected. It was a 21% year over year increase as well. EPS also beat coming in at $8.82 versus the 7.98 that was expected. Net profits came in at 3.3 billion, better than the 3 billion that was expected. And gross margins came in right at 54% guidance. A big part of the story though, here. They've raised it now for the second time just this year now saying they expect full year sales to come in between 49 and $51.5 billion, with gross margins of between 54 and 56%. So that would be an improvement over the margins that we got this quarter. Previously, at a predicted annual sales of between 41 and $45 billion and a gross margin between 51 and 53%. The CEO, Christophe Fouquet, saying that if we look at market demand, the end market demand, this is motivated our customer to increase their CapEx but also accelerate their plans. He went on to say that what they see for logic and Dram is that our customers are getting long term agreements with their own customers, which really invites them to commit for the long term because they have what he called quite unprecedented visibility on what will happen to the markets. Now, ASML is Europe's most valuable company. They're also very unique in that they are the only company in the world that makes this extreme ultraviolet lithography or this EUV machines that are actually used to produce these most advanced semiconductors. Because of that, the CEO went on to say that this translated into a very strong order booking through the first half of 26. That meant that that momentum the company now targeting to add 30% to its 2026 low end EUV capacity and an additional 30% to its 2026 deep ultraviolet or Duv immersion capacity. Orders for these machines, which are essential to build manufacturing. These chips used in AI applications and data centers now stretch out to 2028, according to the CFO, Roger Dassen, saying that they are also close to being fully booked for its 2027 EUV capacity and have already secured a substantial number of 2028 EUV orders. They also revealed in that commentary that Elon Musk's planned Tariff Fab chip production facility in Texas is a part of those orders and that account demand, he said. We're in dialog with all of our customers and we know what their building plans are. And then he went on to just confirm it. Tera Fab is also a part of those plans. So we got some good information here, some good numbers. ASML just showing another sign that investment in AI infrastructure remains robust. Sam. Yeah, we just turned into the read down around half of a percent. Now, I wouldn't read too much into that though, actually, because I was looking at the Netherlands session. Obviously these are the ADR is trading right now, and it actually started 7% higher before ending on the flat line as well. We are seeing the chips under pressure. I thought it was interesting that Intel actually was trading 4% higher pre-open after ASML had sort of given it a shout out about using its machine for chip production, and now that name is also under water to the tune of wow, 5.7%. So a tough day for the chips. Thanks so much, Molly. Let's trade ASML now with Scott Bauer, CEO of Prosper Trading Academy. Good morning to you, Scotty. Obviously we've turned negative right now, but a great report. I don't think it's got to do with the fundamentals here. Maybe more around the positioning in this market. Just walk us through an example trade. Sure. I do like the report here. And you know semis now are getting hit pretty hard. So I'm looking out to next week in ASML. And I want to sell a downside put spread because I think there's some support there. So I'm going to sell the 1680 1670 put spread that expires next week. I'm looking to collect about $4 for that. If stock gets down to that area there, 1676 would be breakeven. That would certainly be a place that I would want to buy the stock if it gets down there. All right. Just looking across this chip trade right now, as we said, pretty much all under pressure across the board here. But a good look at ASML. And thanks for the example