No surprise

ASML Holding NV, Europe's largest tech company, saw its shares plummet 15.6% after reporting earnings that revealed order bookings were only half of what analysts had expected. There’s no denying that ASML is a remarkable business, developing cutting-edge technology to build the world’s most advanced chip-making machines, which are in high demand thanks to the AI and Internet of Things boom. However, the stock is priced for perfection, leaving little room for any missteps. With no analysts holding a sell rating and 77% maintaining buy recommendations, the stock's high expectations create vulnerability. Trading at 38 times trailing earnings in the inherently cyclical chip hardware industry, yesterday’s drop should not come as a surprise. This is why we’ve chosen not to include ASML in our European value strategy, instead favouring companies like Ericsson, which trades at just 1.2 times revenue. Please do not hesitate to contact us if you want to discuss our way of investing in tech companies as value investors.