Why The Market’s Not Reacting To The Biggest Earnings
Summary
Joseph provides a comprehensive analysis of the current market environment, focusing on the divergence between stellar corporate fundamentals and stagnant stock performance in the semiconductor space. Joseph explains that ASML recently reported some of the best earnings Joseph has ever seen, significantly beating expectations and raising multi-year capacity guidance for 2026 through 2028. However, Joseph notes that the stock's flat reaction suggests that investors had already priced in this 'perfection,' with the stock trading at a high forward price-to-earnings multiple. Joseph believes this indicates a broader trend where momentum is thinning in the semiconductor and AI-infrastructure trade.
Joseph suggests that investors are starting to look for value in 'quality durable growth companies' that were left behind during the AI rally. Joseph highlights that Joseph's own portfolio is hitting all-time highs due to gains in non-semiconductor holdings like DoorDash and Meta. Joseph also discusses the importance of management's perspective over market noise, using Netflix's successful password crackdown as an example. Additionally, Joseph covers the validation of Google as an investment following news that Warren Buffett personally initiated Berkshire Hathaway's stake. The video concludes with a critique of 'perverse incentives' in gambling apps and poor legislative decisions regarding data centers in New York.
Mentioned Stocks
Reasoning: Joseph describes ASML as a perfect company with a monopoly but states it is 'priced to perfection' with a forward PE of 44. Joseph explicitly mentions trimming the position at $1,918 and $1,750 because momentum in semiconductors is thinning. Despite the blowout earnings and raised capacity guidance for 2026-2028, Joseph believes the growth is already reflected in the stock price.
Reasoning: Google is Joseph's largest position. Joseph highlights that Warren Buffett personally initiated Berkshire's $10 billion purchase, which Joseph sees as a major validation of the company's quality and future investment potential.
Reasoning: Joseph calls Netflix a 'fantastic company' at a 'very reasonable price' of approximately $70. While acknowledging high volatility, Joseph trusts management's ability to handle issues like user engagement and password crackdowns better than the general public.
Reasoning: Joseph notes that JPMorgan's earnings were very strong. Joseph argues that a bank is only as good as the economy it lends to, and Joseph sees the current US consumer and economy as extremely healthy.
Reasoning: Joseph explicitly mentions buying DoorDash about 30 days ago using funds from trimming ASML. Joseph notes the stock is already up 15% and represents a shift in investor interest toward quality growth names outside of the semiconductor space.