A Creative Deal

The semiconductor giants Nvidia and AMD have agreed to pay the Trump Administration 15% of sales made in China. Yes, you heard correctly. The U.S. President is lifting trade restrictions for advanced chip exports to China, after a rather peculiar deal was struck.

Interestingly enough, this completely contradicts Trump’s stated goal of isolating China globally and slowing down its progress in the AI race. “What for?”, is an appropriate question. That’s pocket change for the treasury, though potentially a massive boost for China’s innovation. Surely, it wasn’t Jensen Huang’s charm that moved the president.

I have been critical of some of Trump’s steps in the past, and while many these moves were double-edged, this one I truly don’t understand. He is giving away, or at least sharing, a technological edge, after having alienated the whole world already. So, you can’t argue that it’s a gesture of goodwill. You don’t run into a bar, shoot five people, and then offer them a beer for their troubles. That’s likely how China will take it as well – a desperate gesture from an out-of-control administration.

For AMD and Nvidia, however, it’s a major win, though it should be pointed out that 15% of all China sales is a strange metric, since it doesn’t consider costs and efforts for making or selling the products. But we are already used to oversimplified calculation methods, since April 2.

Nevertheless, I am sure that Jensen Huang is partying with a great feeling that $20 billion of his company’s revenue is safe – at least for now.

ASML – Short Summary of My Latest Analysis

Yesterday I published a full breakdown of ASML, an exceptional company, undervalued and misunderstood by the market. I’ll briefly outline my key points for an investment case here; if you are interested, check out the complete report on my profile:

ASML is a monopoly. The company is the ONLY supplier of EUV litography machines. These machines lay the foundation for the production of the most advanced chips worldwide. Every major foundry is dependent on ASML’s technology. If they stopped servicing their machines or slowed innovation, the global chip industry would go back to the Stone Age.

People love to talk about Nvidia and AMD, but the truth is that you can forget the AI revolution without ASML. This gives the company enormous pricing power, which it further strengthens by striking exclusive partnerships with suppliers or simply buying them outright.

So, what do you get that for? A 40 P/E? 50, maybe? No, ASML’s stock is trading near multi-year lows at a 25 forward P/E ratio, representing as close to a no-brainer buy for the next five years as you can get.

$NVDA (-1,96%)
$AMD (+5,02%)
$ASML (+1,03%)
$ASML (+0,94%)
$2330
$TSM (-1,56%)
$INTC (+1,27%)
$005930

1) Executive Summary

ASML is the world’s only supplier of extreme ultraviolet lithography (EUVL) systems. This technology is essential for the production of the most advanced chips worldwide.

The company’s monopolistic position in the semiconductor industry provides considerable pricing power and a large moat, forcing customers to buy from a single source: ASML.

Its moat also does not show any sign of fading and is underpinned by decades of R&D, control over the supply chain, and global dependence.

Despite being at the forefront of the AI boom, ASML trades at a forward P/E ratio of ~25-26, well below its average, offering a rare opportunity to own a dominant, critical infrastructure provider, without a massive price tag.

2) Investment Thesis

ASML operates as a monopoly, plain and simple. The company is the exclusive supplier of EUVL machines essential for powering the AI revolution. ASML controls 100% of the global market for these machines – not a single known competitor. Additionally, ASML owns almost the entire value chain for these machines – it acquired multiple suppliers to fortify its position.

Furthermore, the company is not just reliant on selling EUVL machines, as service revenue is responsible for roughly 27% of all revenue. ASML is more than a simple manufacturer of some advanced lithography tools, it is a fully integrated high-tech company, laying the foundation for an AI-dominated future.

Subsequently, as these machines advance, chip foundries like TSMC and Intel have no other choice than purchasing newer models, in order to maintain their position. ASML is in a unique spot to set the pace of innovation for global foundries, which is powering the AI boom and data center expansion.

Finally, ASML illustrates a classic case of market mispricing. Investors undervalue the monopolistic position of the company and rather tend to focus on short-term trade headwinds. It would also be wise to consider that the force creating the tariff concerns, would never allow the U.S. to fall behind in the AI race, and there is no company more crucial to facilitating innovation in that regard than ASML.

This represents a (near) perfect opportunity to add a monopoly in the arguably fastest-growing industry worldwide, to your portfolio at a forward P/E ratio around 25, a multiple-year-low valuation.

3) Growth Drivers

While the AI race is fully underway now, underappreciated innovators like ASML drive this immense growth. Global demand for WFE (Wafer Fab Equipment) is rising rapidly, which is reflected by ASML’s healthy growth (Revenue CAGR ~15%, 2021-2025).

The scaling of AI models moves demand for WFE to more advanced machines and is likely to lead to a rise in total sold products (at a higher price point), as well as increased service revenue.

On top of the secular growth prospects, cyclical rebuild cycles, as happening for DRAM and NAND memory chip suppliers, play a major role in ASML’s global expansion. Companies like Micron need to level up their machines regularly to meet rising cloud demand.

Similarly, major chip foundries are constantly innovating, which can only be facilitated through advanced systems, delivered by ASML. In order to keep a competitive edge over competitors, global players like TSMC, will always buy the hottest and newest lithography machines, which benefits the only player in this market: ASML.

With rising CapEx, the company is in a prime spot to capitalise, which makes future growth estimates seem conservative.

4) Competitive Position

ASML’s technology is deeply embedded in the operations of the largest chip makers worldwide. Leading global foundries like Samsung, TSMC and Intel account for the lion’s share of ASML’s EUVL sales, which makes them heavily reliant on ASML’s maintenance services as well, boosting recurring, high-margin revenue generation.

To understand why ASML is in such a monopolistic position and has widened its moat over time, it is important to consider a few factors that prevent competitors from entering the market successfully.

A first technological barrier for other companies is the R&D intensity of the business: ASML has invested billions in EUVL for decades, apart from the millions of hours of development that were spent before the first commercial shipment.

Another substantial advantage for ASML is its control of the supply chain: the company has exclusive partnerships with Zeiss (optics) and Cyber (light sources), for instance, through partial ownership or full integration, ensuring value chain quality and safety.

Also noteworthy is the relationship ASML has built with customers over years of successful integration of its machines into global chip production facilities. Competitors would have to outshine ASML’s reputation or seriously undercut prices to lure foundries away.

5) Recent Financials

Highlights of the most recent Q2 2025 report:

· Total net sales: €7.7 billion (upper bound of guidance)

· System sales: €5.6 billion, with Installed Base Management hitting €2.1 billion (strong recurring revenue)

· ~54% gross margin and 35% operating margin (beating guidance)

· Net bookings: €5.54 billion, with ~€2.3 billion from EUV systems

· Announced dividend of €1.60/share and major buybacks of €1.4 billion

While there are many positive takeaways, from the results and the call, like strong execution (sales and margins beat expectations), high bookings in EUV signalling continued demand, recurring revenue strength and a healthy buyback program, not everything was great.

Most notably, the refusal of management to confirm growth for 2026, due to macroeconomic and geopolitical uncertainties and a disappointing sales guidance for Q3.

However, the positives seem to outshine the negatives on these results and geopolitical uncertainties tend to resolve fairly quickly in this day and age, considering the high deal flow announced by the White House, which makes me optimistic for a brighter guidance in the next earnings report.

6) Valuation

As mentioned above multiple times, ASML is cheap at current levels, considering its position. Here are some key metrics to underpin that assumption:

· Forward P/E: ~25/26 (avg. of ~34 in the last 5 years)

o Considerations: EPS consensus seems rather conservative, due to highlighted geopolitical tension during the last call

· Forward P/FCF: ~30 (falling rapidly YoY due to strong growth, expected to continue)

· Gross Margin: ~53% (at ATHs, up from 45% in 2019)

· Operating Margin: ~35% (up from 24% in 2019)

· FCF Yield: ~4% (avg. ~3.3% in the last 5 years)

Multiple factors including the company’s moat, and future potential, a multi-year low valuation combined with expanding margins and free cash flow yield, make the stock a compelling buy right now.

7) Risks

Trade restrictions form one of the key problems ASML faces, though it might not be as bad as it looks. Much of the uncertainty around possible tariffs has already vanished, especially after the U.S.–EU trade deal and President Trump’s confirmation that companies investing in America will be exempt from the immense tariff rates (>100% and rising) imposed on the semiconductor industry.

Another possibly considerable risk is innovations of Chinese competitors happening under the radar. Nobody can estimate how far China has already advanced and how soon they could launch alternative solutions to ASML’s products.

However, there is a geopolitical lifeline, even in the unlikely case that Chinese newcomers could overtake ASML: The U.S., especially under the current administration, and in part Europe aim to be as independent from China as possible, reducing the risk of U.S. foundries rotating their sales to a possible Chinese competitor. And even if no restrictions were imposed from the Western side, there is no incentive for China, an autocratic regime, to allow its tech to aid the U.S.’ advances in the AI race.

There is no company that does not face any risks, though ASML is in a relatively strong position to alleviate core uncertainties, especially those within their control, through innovation and strong management execution.

8) Catalysts & Timeline

In the near future it is possible that geopolitical pressures can keep the stock down, but it is critical to emphasize that these issues are temporary. The AI boom is fully underway and the chip market is booming, further solidifying ASML’s importance globally.

Mid to long-term the outlook is incredibly bright – the stock market usually does not misprice excellent companies forever and while Nvidia and AMD are getting most of the spotlight, ASML is compounding in the background. Macro headwinds are likely to fade over the next quarters and the stock is poised for a rebound.

9) Conclusion

ASML sits at the intersection of demand (AI, advanced logic, memory) and impresses with a near-insurmountable technological moat as the sole EUVL supplier. The Q2 2025 report demonstrates robust demand and healthy, expanding margins, and while management’s cautious tone might signal uncertainty, it is more likely they try to set low expectations, in order to beat later. This should not unsettle long-term investors, who believe in the AI revolution, resulting CapEx, and strong fundamentals.

Personally, I think the downsides are limited and, to a great extent, already priced in. It is vital to emphasize again that a Forward P/E ratio of 25 is certainly not expensive for a sole contender in their respective field, especially one so crucial for the future.

$ASML (+1,03%)
$ASML (+0,94%)
$TSM (-1,56%)
$2330
$INTC (+1,27%)
$005930
$NVDA (-1,96%)
$AMD (+5,02%)

Hi everyone,

I'm hoping to get some help with a tax issue I've encountered with dividends from my $ASML (+1,03%) shares (ISIN: NL0010273215).

I received a dividend payment, but it seems like I've been hit with double taxation. As you can see in the attached image, there are two separate deductions: "Retención fiscal" (Tax withholding) and "Impuesto sobre la renta de las personas físicas" (Personal income tax).

This is the breakdown:

• Gross Dividend: 2.72 EUR
• Tax Withholding: -0.41 EUR
• Subtotal: 2.31 EUR
• Personal Income Tax: -0.44 EUR
• Net Total: 1.87 EUR

ASML is a Dutch company, and I'm a resident of Spain. I understand that there's typically a withholding tax from the source country (the Netherlands in this case), and then I need to declare the income in my country of residence. However, I thought that tax treaties were in place to prevent this kind of double taxation.

My question is:

• Why am I being charged twice for the same dividend income?
• Is this a standard practice, or is there a way to reclaim one of these taxes?
• Has anyone else experienced this with ASML dividends, or with dividends from other international companies?

This is happening firstly since I recently move my IBAN to Spain in Trade Republic, previously with German IBAN this was not happening.

Any insight or advice would be greatly appreciated. Thanks in advance!

After Switzerland, Brazil and the EU, India has become the latest target of Donald Trump’s trade war fantasies. India now faces a tariff rate of up to 50% for purchasing oil from America’s legacy enemy Russia.

Why is President Trump doing this? Doesn’t it do more harm than good to his economy and global trade relations? Probably, but the truth is that the former businessman doesn’t seem to care much. By know, we know his tactic: Scare the enemy. No matter how mighty their economy may be, slap a ridiculously high tariff on them, then start negotiating.

While seasoned diplomats or old-school presidents might prefer to talk first, threaten later, if inevitable, Trump flips the script. In fact, he’s a bully, the greatest of them all. And the negative connotations of the word “bully” aside, his strategy seems to work. President Trump has a unique ability to force outcomes that favor his agenda.

We started the year with practically zero tariffs on major imports. Then came April 2nd, “Liberation Day”, where markets experienced a cold awakening. That day, everybody’s worst fears came true: exorbitant tariff rates on every country from Germany to the Easter Islands. No one was spared. And what was the cherry on top? The rates were based on a flawed formula not even his advisors seemed to fully grasp, though I doubt Peter Navarro could grasp the breakfast menu, let alone math. The man that managed to start a feud with everyone, from Elon Musk to John Doe.

Since then, several deals have been struck, with varying degrees of success. The EU, for instance now faces 15%, which is celebrated as a massive win, while forgetting that it’s 15% points more than before. And what did markets do? Nothing. Completely disconnected from fundamentals, equities marched higher setting fresh all-time highs.

While that’s largely due to the phenomenon of the “TACO-Trade”, what investors take lightly is the fact that tariffs remain elevated and significantly higher than last year. Yes, Trump tends to chicken out, but his plan is more calculated than it appears: The order of events is repetitive:

1. Look for a camera

2. Announce absurd tariffs, while markets collapse and WSJ’ journalists type their fingers sore

3. Extend the deadline a few days later

4. Strike a “historical”, though rather symbolic deal

5. Redistribute corporate profits into Treasury coffers

But enough criticism for now. In the end, only time will tell whether Trump’s strategy results in an economic boom and global investment into the U.S., or a lasting decline in American influence and global standing. Though I would bet on the latter.

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$NVDA (-1,96%)
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$AMD (+5,02%)
$MU (-3,14%)
$ASML (+1,03%)
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