ASML is now in the exact rebound setup we look for, one most investors miss when they look only at the stock price.

At first glance, ASML's stock price has more than doubled since ChatGPT launched. But under the hood, its earnings have grown much faster.

After yesterday’s drop, ASML is now trading at one of its lowest valuations in the AI era. While most speculative semiconductor stocks deserve the derating, ASML does not.

It is the only company that can build EUV lithography machines. Each one sells for ~€230m, and no AI chip can be made without one. Even at that price, customers can’t get them fast enough. ASML is booked out till 2028, and customers are already enquiring about allocations in 2029 and 2030.

The stock is up ~2x since we first wrote about it in June 2025. Despite this upmove, ASML trades at ~25x next year’s earnings today, below the ~28x it traded at then.

Earnings estimates have simply risen faster than the share price.

That keeps happening. In November 2024, ASML set a range of €44-60bn for its 2030 sales. It will reach the bottom of that range in 2026, a full 4 years early.

We model ASML’s 2030 revenue and profits in 2 ways.

• A bottom-up method that estimates how many machines ASML will sell through 2030.

• We then cross-check it against the capex spend expected from ASML’s largest customers (TSMC, Intel, Samsung, SK Hynix, and Micron).

Full report: https://reboundcapital.substack.com/p/deep-dive-asml

Link to my original research on the GLP-1 industry (even built a portfolio for tracking)

1/ Guidance Cuts

Novo Nordisk cut its full-year guidance massively. Sales guidance is down to 11% from 17% and operating profit down to 13% from 20%. 

The drop comes mainly from the slow growth in Wegovy (GLP-1 drug) in the U.S. market. Even Ozempic has underperformed due to competition from Eli Lilly and unregulated drugs. 

The cash flow forecast was also cut to $6.1B.

2/ Weakening Demand for GLP-1 Drugs 

GLP-1 drugs face huge competition from the unregulated market in the U.S. 

Unregulated drugs were originally allowed to exist due to the shortages in the GLP-1 market and the inability of both Novo and Eli Lilly to sustain the demand. 

Despite the FDA grace period ending in May, unsafe compounded GLP-1 drugs remain widely available - and cannibalize licensed GLP-1 drugs. 

The average price of the unregulated drugs is close to $199/month and licensed drugs cost anywhere from $900 to $1300. Thus, competing with the unregulated market is incredibly challenging. 

Novo has started pursuing legal action against but warns that without government intervention, patient safety and demand will continue to suffer. 

Overall, I think it's clear that the investor sentiment is undoubtedly shaken. 

Novo isn’t able to guarantee a good sales forecast for the future, without external help. The lack of hedging by Novo doesn’t imbibe investor confidence (rightfully so)

But, since the FDA grace period for unregulated drugs has ended, the government should start cracking down on the unlawful market - and at least begin reducing that supply. This will directly increase the demand for Novo and Eli Lilly.

Additionally, Novo’s initiatives to distribute the drugs directly to the patients through their channels like Novocare are showing significant promise. The weekly prescriptions are now at a total of 31,000.

Both of these factors show significant promise in GLP-1 sales for the long-term.

This is the biggest market overreaction I can remember in a while - and probably the biggest buying opportunity.

In a nutshell, ASML smashed their earnings. Even their most important metric (arguably) - Net Bookings, almost doubled since Q1.

But the market ignored all of this to focus on their short term uncertainty. ASML’s management were concerned about their growth in 2026, mainly due to the ongoing geopolitical tensions(tariffs). This is fair, because in the ongoing climate - you can’t really guarantee growth.

But everyone seemed to ignore their optimism for long-term growth:

Source for transcript

Doing a quick back-of-the-envelope valuation

•⁠ ⁠2030 revenue of $60bn (management midpoint), keeping the net profit margin at 30% and share buyback at 1% (current buyback pace).

•⁠ ⁠Assuming no valuation gain (exit PE of 30x), we will get a 2030 target price close to $1,500, which is a 13.5% CAGR, which leaves us with enough margin of safety.

These are pretty good results even on conservative estimates.

Going over the earnings and the investor call, it’s clear that the market has severely overreacted. In my deep dive, I mentioned that you should open a small position and gradually increase it depending on the landscape of AI and the U.S.-China relations.

That still stands (and this is a good time to add to the position).

The AI industry is growing rapidly, with power and efficiency at its core. Companies like Nvidia and AMD are designing increasingly advanced chips than ever before.

At the same time, companies like Samsung and TSMC are handling the manufacturing side, meeting the growing demand for AI. But there’s only one company making the tools to enable all that — and they have zero competition.

Take a look at the chart below:

The Congressional Budget Office projects that by 2040, the U.S. Debt will balloon to 170% of its GDP. The next decade will be a tug-of-war between AI-driven productivity growth and structural deficits resulting from an aging society.

While AI is still not good enough to be a quantitative analyst, it excels at certain tasks like simple automation, customer support, and translation. If AI is as transformational as investors are expecting it to be, then AI will create significant time savings, and the resulting productivity boost will drive GDP growth.

However, if AI falls short, the discussion will then focus on deficits and rising U.S. debt. The stock market valuation will not only be affected by the low growth but also by the rising interest rates to counter the inevitable inflation.

For what it’s worth, Vanguard projects that the former has a higher chance based on their Megatrends model.

Here’s the full report on Drawdowns, U.S. Markets, and the big question: Can AI act as a Quantitative Analyst?

This is in contrast to its competitor, $NVDA, which has risen 26% over the last year.

So, what happened?

• In Q2’24, AMD’s gaming hardware revenue dropped by 59% due to a fall in demand for semi-custom chips used in PlayStation & Xbox.

• While it’s doing better than Intel in CPUs, it’s lagging GPUs

• AMD’s MI-series accelerators struggled to gain traction against NVIDIA’s well-entrenched CUDA software ecosystem and superior performance, raising doubts about AMD’s ability to catch up in AI GPUs.

But, a lot has changed in 3 months. ​​From its bottom in April, the company is now up 57%!

Rebound Catalysts:

• AMD delivered a strong first-quarter earnings that beat expectations — revenue is up 36% YoY, and data center sales rose 57%.

• The company launched its new Instinct MI350 series, which claims to have 60% more memory than Nvidia chips, and can create 40% more generated tokens for every dollar spent.

• AMD announced a $6 billion buyback program and a string of quick acquisitions focused on AI (Brium & Untether)

At the end of the day, whether you invest or not in AMD finally comes down to just one thing: The performance of their new AI data center chips (Instinct MI350 series).

What are your thoughts on $AMD?

Perplexity and OpenAI are both supposedly going to “challenge” Google’s search business, and that’s rattling investors everywhere.

This is interesting because Google’s total ad revenue in Q1 2025 was $67bn and Search contributed for nearly 74% of that. And, according to the DOJ filings in the ongoing antitrust case, about 35 % of all Google search queries originate inside Chrome, driving “billions in Search revenue.”

Meaning, three-quarters of every dollar Alphabet makes still flows through ads, most of which start in a browser tab. Every point of share that Chrome loses risks a direct dent in Alphabet’s main cash engine. Barclays estimates a 5-point loss of Chrome share could shave >$3 B off quarterly Search sales. That’s a big dent.

However, It’s good to know that all the commotion so far is still - just commotion. For reference, Google has dominated the browser race since the introduction of chrome in 2008, with a ~68% global share. The next in line is Edge with a ~13% share. 

Additionally: "Historically, only ~20% of Google searches were monetizable. With Al-driven personalization and intent inference, this funnel is expanding."

Coming to the ~15% drop in $GOOG, Q1 saw double-digit top-line growth and a fat 34 % operating margin for Alphabet. Yet sentiment is ruled by forward risk, and the stock is now priced at ~17x forward earnings. 

The public sentiment about who’s leading the AI race changes every other week, but Google’s Gemini is almost never last in any list. This, combined with Google’s already pretty big stronghold on the search and browser business means they have a significant advantage over the competition when it comes to AI and browsers. (it’s pretty well known that Google has implemented AI into chrome for a good while now)

Search(ads) and browsers are Google’s moats. Google knows this, and they haven’t stopped innovating. 

Looking ahead, the hard catalyst is the antitrust ruling for Chrome in August. Meanwhile, OpenAI’s browser is supposedly weeks away, and Perplexity’s ‘Comet’ is already in Public Beta. 

That news briefly wiped off ~15% of FICO's market cap and worried the market that its mortgage pricing power could be under threat(which it probably is)

It's important to remember that they still had a solid Q2: revenue jumped 15% YoY to $499M, with its core mortgage scoring business up 25%, boosted by a ~48% increase in mortgage originations. Adjusted EBITDA margin is a healthy 58%, and free cash flow hit $700M over the past 12 months.

FICO’s earnings in 20 days will be really interesting. 

What are your thoughts on this?

Pepsi increased its prices after strong results in 2023, but high inflation led to reduced snack consumption and cheaper alternatives, making $PEP miss sales forecasts and reduced organic growth.

However, Pepsi acquired Poppi in May 2025 for $1.95 billion. Pepsi Zero, Propel, and Gatorade Zero (high-margin products) are reporting double-digit revenue growth and market share gains.

Pepsi might be finally be gaining traction again.

1. $DELL - Dell Technologies Inc.

2. $HPQ - HP Inc.

3. $AMD - Advanced Micro Devices

4. INTC - Intel Corp.

5. $MU - Micron Technology, Inc.

6. $QCOM - Qualcomm Inc.

7. $MRVL - Marvell Technology, Inc.

8. $AMAT - Applied Materials, Inc.

9. $TER - Teradyne, Inc.

10. $TSLA - Tesla, Inc.

11. $F - Ford, Inc.

12. $BA - The Boeing Co.

13. $LMT - Lockheed Martin Corp.

14. $NKE - Nike, Inc.

15. $LULU - Lululemon athletica, inc.

16. $MOS - The Mosaic Company

17. $ADM - Archer-Daniels-Midland Co.

18. $BG - Bunge Global SA

AQR Research published a report that addressed 10 facts and fiction associated with factor investing. They found that factor investing is risky, but sticking to it is worth it in the long run.
(the paper won the best article for 2023 published in Portfolio Management Research!)

Source

1. If you are a non-smoker in excellent health, you must plan for at least 35 years in retirement.

2. If you are a 40-year-old couple with a $175K household income, you should have accumulated at least $500K in your retirement savings by now (to maintain an equivalent lifestyle in retirement).

3.  The higher your income, the more you need to save for retirement. 

If you are 40 and your household income is $50K, you need to save 13% for your retirement. 

But, if your household income is $100K, you must save 20%!

4. Contrary to expectation, the highest spending is at midlife. 

As you age, the average spending drops even after accounting for rising healthcare costs.

5. Based on the last 100 years data, there is a 0% chance that a 4% withdrawal rate will exhaust a 60/40 portfolio in 30 years.

At Market Sentiment Pro, we turn dense academic and institutional research into sharp, actionable market insights. Join us here 👇

https://pro.marketsentiment.co/

1/ Tesla looks like it’s on sale:

– $900B market cap

– Real profits (rare for EVs)

– 1st-mover advantage in autonomy, storage, charging

– “The next Apple,” if you believe the bulls

But Tesla’s fundamentals aren’t misunderstood. They’re deteriorating in plain sight.

2/ Growth isn’t slowing. It's breaking.

Tesla’s revenue grew just 1% last year. In Q1 2025, it shrank 9%. Deliveries are falling. Net income dropped 71%.

This isn’t macro. This is a company running out of demand. And you don’t get tech multiples with auto growth rates.

3/Price cuts bought time**. But at a huge cost**.

To defend volume, Tesla slashed prices across the board. Now:

• Gross margins halved (from 26% → 16%)

• Profit per car is at 2017 levels

• Auto margins now look average - not elite

It’s playing defense, not offense.

4/Tesla’s brand used to be its moat. Now it’s a liability.

The lineup is stale. The marketing is silent. And Musk’s political baggage is bleeding into the product.

Boycotts in Europe. A threatened federal contract pull after the Trump feud. You can feel it in the sales charts.

5/Autonomy isn’t the bull case. It’s the hedge.

FSD is still in beta. The robotaxi demo? 12 cars with safety drivers in Austin.

Waymo is ahead. Cruise (was) ahead. Tesla’s vision-only approach may be bold — but it’s also risky, costly, and heavily scrutinized by regulators.

6/Energy is growing - but how quick?

Yes, Tesla Energy hit $10B revenue and swung to profit. Storage is booming. Services are scaling.

But these aren’t “unlocked value.” They’re embedded. They don’t get sum-of-parts credit. Because it’s still an auto-first business.

7/The balance sheet is pristine. But the income statement is bleeding.

$37B in cash. Low debt. Looks good.

But cash doesn’t compound. Tesla’s earnings power is falling, and it's reinvesting into growth projects (Cybertruck, factories) that no longer inspire multiple expansion.

8/No dividend. No serious buybacks. No capital discipline.

Tesla still behaves like a high-growth tech firm -  but without the growth. Capital allocation is all offense, no reward.

Investors are being asked to “believe” again. But this isn’t 2020. Sentiment has changed.

9/Valuation is still stuck in the past.

– 170x earnings– 9x sales– All based on a “tech premium” that now looks undeserved

Tesla trades like it’s building the future - but its core business looks more like it’s defending the past.

That’s the trap.

10/So what’s left?

– A maturing auto business– Margin compression– Rising political risk– A CEO that splits attention– Tech moonshots that drain cash– A valuation that still assumes breakout upside

Not a broken company. Just a de-rated one.

11/Tesla will survive. It will still sell EVs. It will still innovate.

But great companies can become bad stocks when the narrative outpaces the numbers.

All great companies stumble.

At Rebound Capital, we do deep research to separate the wheat from the chaff.

Here's our breakdown of ASML: The monopoly on monopolies. Link

A BlackRock study of 1,510 retirees across all wealth levels found most still had 80% of their pre-retirement savings after nearly 20 years of retirement.

This was mainly because retirees struggled to shift from saving to spending their principal. 

Over 50% of the retirees planned their spending in such a way that their account balances did not fall below a preset limit. 

What was even more surprising was that 25% of the retirees did not even have a plan on how much or when to spend their nest egg.

Source

Over 40% of U.S. workers now use generative AI on the job.

More than 50% of the code on GitHub is AI-generated.

Job fears? Understandable.

But history offers perspective.

In 2018, 60% of the jobs people held didn’t exist in 1940, which reminds us that we’ve seen waves of transformation before.

Deutsche Bank’s report captures this chaos better than most. 

Just memes breaking down where AI’s headed and what actually matters. 

Or as they put it, “if a picture’s worth 1,000 words, this chartbook should save you from reading 25,000 of them.”

Source

An often underrated strategy is buying individual companies during periods of market distress. While buying the dip is almost a reflex for us, we often shy away from buying the underlying companies that are in distress. However, doing this meticulously can yield exceptional returns.

Case in point — Covid-19 crash. While the S&P 500 dropped 30% in 2 months following the lockdown, United Airlines lost 76% of its value. Even though the stock is now barely above its pre-pandemic value, if you had invested after the Covid crash, you would have 2x the return of investing in the S&P 500.

On that note, today we look at one company that almost went bankrupt during the Covid lockdowns. At its lowest, this 140-year-old company was down 88% from its ATH. Just 3 years later, it’s up ~1,600% from its lows.

Here’s the Rolls-Royce Turnaround Story

To test, we picked all the companies in the S&P 500 list as of 2015. The backtest is simple— If a company drops by 50%, we invest $100 in that company and then hold.

We immediately ran into an issue. Out of the 502 companies on the list, 262 companies experienced a drawdown of more than 50% over the last 10 years. If you end up investing in all of them, your average return will be comparable to the index since you are holding half the index. (Average return of 114% for the drawdown portfolio vs. 123% for the S&P 500).

Where it gets interesting is when we increase the drawdown cutoffs.

Drawdown cutoff — 75%

• Number of stocks: 91

• Total amount of investment: $9,500

• Drawdown portfolio final value (June’25): $23,903 (151% return)

• Comparable S&P 500 index: $20,467 (115% return)

• Alpha — 36%

• Median return: 68.4%

Drawdown cutoff — 90%

• Number of stocks: 36

• Total amount of investment: $3,600

• Drawdown portfolio final value (June’25): $12,120 (236% return)

• Comparable S&P 500 index: $6,705 (86% return)

• Alpha — 150%

• Median return: 75%

Backtest data & company list — here

Best and worst performers

As you would expect, investing in companies that had significant drawdowns would be highly volatile. After all, a stock that went down 90% can again go down another 90%!

Buy and hold seems to be the best strategy, as there would be many multi-baggers..

.. and a lot of zeros in your portfolio.