GrowthTurtle
Data Science PhD & IEEE Fellow, Ex-Two Sigma
Kulicke and Soffa looks cheap against its cash earnings, about 28% below the low end of fair value at $99.09. It trades at 25x cash earnings and 15x next year's, while chip-equipment makers usually get 25x, putting fair value at $136.86-174.19. The view leans on forecasts, with forward earnings 54% above trailing. A pullback zone sits at $64.16, and it would be expensive above $148.51. x.comÂ
Accelerating earnings mean ASML is not expensive right now. It trades at 24x forward earnings and 19x forward EV/EBITDA. x.comÂ
Amkor's expansion in advanced packaging supports a bullish growth outlook as that work becomes more important. Packaging accounts for 88% of sales and computing revenue rose 25%; capacity spending explains negative free cash flow. Q3 EPS was $0.76, implying roughly 12x annualized earnings, while Q4 EPS guidance is $0.65-$0.75. The compute opportunity is only starting, despite the decline in mobile. x.com x.com x.com x.comÂ
Semiconductors are now cheaper than the broader market on forward earnings, provided earnings cuts do not undermine that discount. The sector's forward P/E is about 17 versus roughly 18.6 for the S&P 500. x.comÂ
Broadcom's custom AI chips and networking could drive earnings beyond what its valuation implies over 2-3 years. It is the favorite semiconductor opportunity now, preferred over NVIDIA without replacing it. AI semiconductor revenue is projected at about $58B in FY2026, $115B in FY2027 and potentially $230B in FY2028. At about 17x FY2027 consensus adjusted earnings, risk/reward is compelling if growth materializes; customer commitments add visibility, but delays and financing remain risks. x.com … Show more
The Nasdaq 100 already effectively prices in a severe semiconductor recession. QQQ trades at about 20 times 2027 EPS versus a 10-year average forward P/E near 25; halving 2027 estimates for Nvidia, Broadcom, AMD, Micron, Lam Research and Applied Materials would lift that only to 24.5. If the market instead traded at 20 times in that scenario, downside would be about 20%. Capex seems unlikely to be cut materially unless growth at AI labs such as Anthropic decelerates dramatically. x.comÂ
ASML's valuation does not make sense at 45-50x forward earnings unless estimates are too low by around 2x. It has always had pricing power but chosen not to exercise it; that may change, but if it does not, the multiple is hard to justify relative to other opportunities. x.com x.comÂ
Semiconductor gains will now have to come from earnings growth rather than multiple expansion, but NVIDIA at 19x forward earnings can still make money. Rising margins normally compress multiples because peak margins signal peak cycle; this cycle ran long and euphoric buying drove multiples up, so a correction was bound to happen. With capex growth projected to slow from 2028, semis growth will likely slow too, and the window to profit from buying chip stocks at 25x sales is closed. x.comÂ
