US Stock Semiconductor Special (4) - Lithography Leader ASML & High-Speed Interconnect CRDO

Yesterday, semiconductors fell sharply. Samsung, SK Hynix, and even stocks not yet listed in the US all dropped a lot. But I think this wave isn't over yet. The main source of panic this time was the news about Meta's AI computing power being idle. However, you should know that the earnings reports at the end of July will still be good. A single piece of news won't immediately affect the earnings reports. So you should know what to do.

Continuing with the US semiconductor series, we previously talked about the "deposition leader" AMAT, the "etching leader" LRCX, and the "inspection leader" KLAC, as well as the lithography leader ASML.

1. ASML

There's not much to say about this one, right? Its reputation should be well-known. Even before the semiconductor cycle took off, this company was heavily promoted. You've probably heard of "lithography machines" one way or another. When domestic chips were being blocked, the media also reported why domestic chips couldn't be produced—one of the core bottlenecks was the "lithography machine."

Currently, only ASML in the world can mass-produce EUV (extreme ultraviolet) lithography machines. All 5nm, 3nm, 2nm, and even future 1.4nm chips must use its equipment.

And the EUV lithography machine isn't something ASML can make alone. Its components are as follows:

Zeiss's lenses achieve atomic-level precision, with an error of no more than 0.1nm. No one else can do this!

Then a single EUV lithography machine sells for as much as $2-300M. It contains over 100k parts, weighs 180 tons, and takes a year just to debug.

Therefore, ASML is number one in the world in the field of high-end lithography machines, and its technological accumulation cannot be surpassed in the next 10 years!

Currently, its market cap is $713.4 billion, with a P/E ratio of 61. In recent years, revenue has grown steadily. In 2025, revenue was $36.8 billion, with net income of $10 billion. Currently, institutions give a revenue growth rate of 10% per year.

The stock price went from 3 in 1999 to 1,769 now, a 580-fold increase. I've looked at the historical K-line, and there are almost no significant pullbacks. So if you want to play the long term, I think it's fine.

2. CRDO

This is also a company focused on high-speed interconnection for AI servers and data centers, and it is very specialized in this area. Its official mission is to provide faster, more power-efficient, and more reliable high-speed connection solutions for AI, cloud computing, and hyperscale data centers. It is in the same track as Astera Labs mentioned earlier, but with some differences. Astera Labs specializes in high-speed interconnection between GPUs and memory.

CRDO, on the other hand, currently focuses more on external connections between servers, such as from Server A to a switch to Server B.

Its main products include:

1. SerDes IP – This is also CRDO's core product. It mainly converts GPU data into an ultra-high-speed signal and restores it at the other end, for example, to another server.
2. AEC (Active Electrical Cable)
3. Optical DSP (optical module)
4. PCIe Retimer

Currently, the market cap is $45 billion, with a P/E ratio of 104. Revenue began to surge in 2025, with annual revenue of $1.3 billion and net income of $470 million. The estimated revenue for 2026 is $2.4 billion, double that of 2025. Even if I calculate a P/E ratio of 50, it's still a bit high.

The stock price went from a low of 30 in 2025 to the current 240, a 7-fold increase. So short-term it's definitely not something you can buy; you have to wait for a pullback.

For the long term, I think it might be a bit difficult because I estimate this semiconductor wave will only last 1-2 years. After the AI boom ends, it will probably be harder to play.

Finally, to summarize: for now, the four giants in the equipment sector are still worth considering. Their fundamentals are very strong, and they have deep moats!