To The Moon

Semiconductor stocks have just endured another uncomfortable reset.

Memory names have fallen sharply. Asian chip stocks sold off again. Concerns around China's semiconductor progress have returned. Meanwhile, investors are increasingly questioning whether the enormous AI capex cycle can continue at the same pace.

Now ASML reports.

For me, this is one of the most important semiconductor reports of the quarter.

Not because ASML tells us what happened during the last three months.

It can tell us what the world's biggest chipmakers expect to need 12 to 18 months from now.

That makes ASML's order book more important than the headline EPS number.

The Number I Care About Most: Bookings

ASML sits unusually far upstream.

TSMC, Samsung, Intel, SK Hynix and Micron cannot simply decide to produce substantially more leading-edge capacity tomorrow.

They need equipment.

For the most advanced nodes, that means EUV lithography.

And ASML remains the critical bottleneck.

Q3 revenue is expected around €11.6-€11.8 billion, more than 50% higher year on year, with profit also expected to surge.

Those numbers would be impressive.

But much of that is already known.

The surprise will come from new bookings and forward commentary.

If orders remain exceptionally strong, customers are effectively saying:

We still believe future semiconductor demand justifies billions more in capacity.

That would matter far beyond ASML.

Why This Matters for MU and Memory

This is where the report becomes particularly interesting for me.

MU has fallen toward $1,000 as investors worry about conventional DRAM oversupply and whether the memory cycle has peaked.

But there is a difference between:

Short-term memory inventory concerns

and

Long-term semiconductor capacity confidence.

If ASML reports robust demand from memory customers despite the recent selloff, that would suggest Micron, Samsung and SK Hynix still see enough future demand to invest.

That would not eliminate the conventional DRAM risk.

But it would weaken the argument that memory executives themselves see an imminent collapse.

For MU holders, I would therefore watch ASML's commentary on memory-related equipment demand very closely.

TSMC May Be Even More Important

ASML gives us the forward capex signal.

TSMC gives us the current AI demand signal.

And TSMC reports next.

TSMC already disclosed record Q3 revenue of roughly T$1.49 trillion, up about 50% year on year, driven by AI demand.

The market now expects another record profit quarter. 

That makes the combination powerful.

ASML strong bookings + TSMC strong AI guidance = AI capex thesis strengthened.

ASML weak bookings + TSMC cautious guidance = much bigger warning.

One company's report can be noisy.

Two critical companies pointing in the same direction would be harder to dismiss.

CoWoS Is the Second Bottleneck

TSMC's advanced packaging capacity matters almost as much as wafer demand.

AI accelerators require enormous packaging complexity.

Nvidia, AMD and other AI-chip designers can have tremendous demand and still struggle to satisfy it if CoWoS capacity remains constrained.

So I am watching three things from TSMC:

Advanced-node utilisation

CoWoS capacity

2027 AI demand commentary

If all three remain strong, I would view the recent semiconductor weakness more as valuation compression than fundamental deterioration.

The Bear Case Deserves Respect

There is a legitimate reason investors are nervous.

AI capex has become enormous.

Eventually, somebody has to earn an adequate return on all those GPUs, data centres, power systems, networking equipment and memory.

The risk is not necessarily that AI disappears.

The risk is that customers eventually say:

We have enough capacity for now.

Semiconductor equipment stocks would probably detect that change before many chip designers do.

That is precisely why ASML bookings matter.

If bookings suddenly disappoint while management becomes cautious about 2027, I would not brush it aside.

That would be an early-cycle warning.

China Is the Wild Card

China creates another layer of complexity.

Recent progress from Chinese semiconductor manufacturers has increased concern that domestic alternatives will eventually challenge Western suppliers.

But I would separate two issues.

China developing better chips is one thing.

China replicating ASML's most advanced lithography capability at commercial scale is another.

ASML's moat remains extraordinary.

The nearer-term China risk is therefore less about somebody replacing ASML tomorrow and more about export restrictions and the future mix of ASML sales.

That deserves a valuation discount.

It does not automatically destroy the thesis.

ASML Pick Levels

ASML ADRs are around the $1,700 area going into earnings after a huge run.

I like the company considerably more than I like chasing the stock immediately before a binary event.

My map:

$1,625-$1,675: First Pick

I would begin building exposure here if the earnings thesis remains intact.

$1,525-$1,600: Preferred Pick

This is where the risk/reward becomes considerably more attractive.

$1,425-$1,500: Strong Pick

If ASML reaches this zone because semiconductors broadly derate while bookings remain healthy, I would become much more interested.

$1,750-$1,800: First Confirmation

A strong earnings reaction through this region tells me buyers are willing to pay for the next capex cycle.

Above $1,800: Breakout

If bookings and guidance support it, this could begin another momentum leg.

$1,900-$2,000: First Bull Target

$2,100-$2,200: Bull Extension

I would require continued upward earnings revisions to justify this.

Below $1,425: Thesis Check

At that point, I would investigate whether customers are genuinely reducing equipment commitments.

My Earnings Scenarios

45%: Strong Report, But Expectations Are Already High

ASML reports solid revenue, strong bookings and constructive AI commentary.

But because the stock has already risen substantially, investors take profits.

I would expect something around $1,650-$1,800.

This would actually be my preferred scenario because it could give us a better entry without damaging the thesis.

35%: Bookings Surprise Higher

This is the bullish scenario.

EUV and High-NA demand remain exceptionally strong, management sounds increasingly confident about 2027, and customers continue accelerating capacity plans.

ASML breaks $1,800.

I would then watch $1,900-$2,000.

More importantly, I would become more constructive on the broader AI semiconductor chain.

20%: Order Book Disappoints

Revenue may still look excellent because ASML is fulfilling previous orders.

But new bookings disappoint and management becomes cautious.

This is the scenario that concerns me.

ASML could quickly test $1,550-$1,600, possibly lower if guidance weakens substantially.

And I would not automatically buy the first dip.

I would first ask why customers are delaying orders.

What ASML Means for MU

This is probably the part I care about most given the recent memory selloff.

If ASML says memory customers continue investing aggressively, while TSMC says AI demand remains extremely strong, I become more confident buying MU weakness.

My current MU map remains:

$990-$1,020: First Pick

$940-$975: Preferred Pick

$880-$925: Strong Pick

But there is an important condition.

I want ASML and TSMC to help confirm that AI infrastructure investment remains intact.

If they do, I become more comfortable treating the MU correction as an expectations reset rather than the end of the memory cycle.

What ASML Means for NVDA and AMD

For Nvidia and AMD, ASML is an indirect confirmation signal.

Strong future fab investment tells us customers still expect enormous demand for leading-edge chips.

But ASML cannot tell us who ultimately wins AI accelerator share.

That remains a separate battle.

I would therefore interpret strong ASML orders as bullish for the AI infrastructure ecosystem, rather than automatically assigning all the upside to Nvidia.

My Favourite Setup Is Actually a Mild Earnings Selloff

This may sound strange.

I do not necessarily want ASML to surge 10% after earnings.

If bookings are excellent and the stock jumps immediately, much of the opportunity disappears.

My favourite outcome would be:

Strong bookings + strong guidance + temporary profit-taking.

If ASML falls toward $1,550-$1,625 despite intact fundamentals, I would be much more interested.

That is the setup I look for repeatedly:

Price deterioration without equivalent thesis deterioration.

What Would Make Me Change My View?

I would become materially more cautious if ASML and TSMC both begin signalling the same problem.

ASML bookings weaken.

TSMC lowers capex expectations.

CoWoS constraints ease because demand is slowing rather than supply improving.

Memory customers delay equipment.

Hyperscalers moderate AI spending.

That combination would tell me the semiconductor correction is becoming fundamental.

But if ASML orders remain strong and TSMC continues reporting extraordinary AI demand, I would interpret the recent semiconductor weakness differently.

Then the market may simply be doing what markets eventually do after enormous rallies:

Resetting expectations.

My Pick

ASML is my favourite picks-and-shovels semiconductor name from this earnings setup.

It does not need to predict whether Nvidia, AMD or another accelerator designer ultimately wins.

It benefits when the industry needs more leading-edge capacity.

My levels:

$1,625-$1,675: First Pick

$1,525-$1,600: Preferred Pick

$1,425-$1,500: Strong Pick

$1,750-$1,800: Confirmation

Above $1,800: Breakout

$1,900-$2,000: First Target

$2,100-$2,200: Bull Extension

Below $1,425: Thesis Check

The headline earnings number will attract attention.

I will be looking somewhere else.

Bookings tell us what ASML shipped later.

Bookings also tell us what semiconductor executives believe about tomorrow.

And after the recent selloff in MU, SNDK, SK Hynix and the broader AI complex, that forward confidence is exactly what I want to see.

If ASML and TSMC both confirm it this week, I would become more interested in buying semiconductor fear.

If both question it, I would become considerably more patient.

That is why this report matters far beyond ASML.

I am not a financial advisor. Trade wisely, Comrades!

What matters more to you this week: ASML bookings or TSMC AI guidance?

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