This Monopoly Stock Keeps Getting Stronger

Welcome back everyone. Today on the Joseph Carlson Show, one of the largest, most monopolistic companies that makes incredibly complex devices is ASML. We've talked about this company frequently and they just reported earnings last night. Now we have all the data and right now the stock is up 3% on the day back above $1000 per share and management has changed their tone. They sound a little bit more optimistic than they did last quarter. We'll be going over a breakdown

the entire earnings. I'll be dissecting it and looking at what we can gain from it. We also have my position in ASML. I'm invested with the company $87,000, position, 25,000 of that beam gains and I'll let you know what I'm doing with my holding. We also have a lot of other news to get to. Brad Gerstner, the tech investor, went on to CNBC in a long form interview. He was asked about many subjects, including ones like do we think we're in a bubble today?

What are the best companies to invest in where AI will take us over the next five years and why he remains so bullish on NVIDIA? So we'll be looking at that interview. We also have Mark Mahaney. He is one of my favorite analysts and he goes over one subject, which is agentic commerce. Agentic commerce is what we see Open AI implementing with companies like Uber, Booking Holdings, Expedia and so on. We'll be looking at how this can change the dynamics of the market overtime.

We also have news that Waymo is yet expanding once again. We've seen this before. It seems like every week Waymo is expanding to a new city, but in this case, it's London. And then finally, we have the next in line. Salesforce reported a deal with Open AI, typically looked at as a good thing. Every other time this has been reported, the stocks go up, but in the case of Salesforce, it went down. What is wrong with Salesforce? Why does everyone hate this company so much?

We'll be taking a look at it as well. So we have a ton to get to in this episode, a lot to go over. And before we jump in, just a quick mention if you haven't tried it out, qualtrim.com is the website that I created and that I use. It's built specifically for my audience, for investors that like diving into the financials, looking at KPIs, reading earnings reports.

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I know you'll love it. We're nearing 11,000 paid users and of course, for some reason you don't like it, you get a free refund, no questions asked. Now we first kicked things off by looking at ASML. It's a company that I own that just reported earnings. Now, before we look at the earnings report, I just want to go for my stake in this company. I think it's important to show some transparency here of my financial interest, how I'm invested in this company, and

I'm a proud shareholder of ASML. It's a company that took some time to learn about in most cases. I own software companies, the Google's and Microsoft's. These companies that I'm I'm well aware of their products. I know how they work, and ASML is a company that I had to learn a lot about to become comfortable with investing in this company. I read the book Focus. It's one that goes over the history of the company and I learned about the incredible technological supremacy the lead

in technology this company has. If you really want to study ASML, the best thing to do is to study how complex their devices are. It's like nothing you've ever seen before. More complex than rocket ships, more complex than satellite, these are possibly the most complex devices on planet Earth. They're impossible for other people to replicate what they're doing. And even though state funded nations like China are trying to do just that, they're far behind.

And every time they seemingly catch up a little bit, ASML moves much further ahead. And that's not the only monopolistic part of ASML. The other part of its monopoly is its distribution. Not only is it unique in the technology that it makes, but it's also unique and all the agreements it has with all the supply buyers, all the people that that supply all the different parts for their technology. Many of these agreements are

exclusive to ASML. Then you have an additional layer of remote through distribution. The people that ASML sell to their long term partners, they've worked well with them for a long period of time. In order to disrupt this company, to truly disrupt it, it would take a monumental effort by someone else, and even then it would likely be unsuccessful. The amount of capital and time and energy wasted and trying to defeat ASML is incredible.

So I've invested in this company on the basis that it's a wide Moat monopolistic company that also has great economics. It's a company that produces excess cash flow, that does consistent buybacks. It has a management team that's very long term focused. They have very predictable long term growth. So right now this is a new position in the portfolio. It's less than two years old and it's an $87,000 position with $24,000 in gains.

This has been an exceptionally good performing position on a relatively low risk holding. Now, soon after I bought into ASML and made a relatively large position, we had an earnings report back in July, just their most recent earnings report before this one, and this was the warnings that we got. These were the headlines after that report. ASML stock tumbles after growth warnings in earnings report.

Tariffs are biting. It looked like a management was really sounding the alarm saying that things were going really poorly. At the time of this earnings report, ASML went down to around $730 per share. My holding was nearly in the red. So this was a kind of sad report to see, or at least a disappointing report to see. And I got a lot of questions about this company. The video that I made at that time was I thought this was ridiculous.

I thought the ASML should not be trading down because of a few comments from management. ASML said that they were fully prepared to grow in 2026, but they couldn't confirm it now. Since they couldn't confirm growth because of reasons out of their control because of tariffs and other restrictions, they couldn't officially confirm growth just because of that. The stock sold down 10% and to me that was a time to buy. So I added to the position after this sell off.

And that brings us to the most recent earnings report that happened just yesterday. ASML went from 700 and around $30 per share to now $1010.00 per share, a 38% increase within a single quarter, a three month period. So huge expansion and share price in a short amount of time. Now, in most cases, this would make investors concerned that the stock price has shot up in only a single quarter, but I am not concerned about this and I think it's warranted in this

case. Let's take a look at some of the fundamental developments happening with this company. First of all, we got a list of management team and appointee changes. They have a deep bench of of talent at SML, so they have a lot of people to pick through and they're now rearranging their management to some degree. We also have their Q32025 financial results. This is the most recent quarter they say Q3 net sales were 7.5

billion within guidance. So the net sales was the disappointing part, the overall revenue. But like I highlighted in the most previous episode, it is hit or miss whether or not ASML makes revenue. It's like a coin flip and it doesn't matter. They get contracts for revenue and whether or not they collected this quarter and next quarter doesn't make much of a

difference in the long term. But we get to the part here that I really have a focus on. I think this is just a really important part of ASML and an underrated part of it. With every business, there's like this revenue by segment and in many cases, there's a sleeper segment, a part that's just far more important than all the other segments. And if you're not paying attention, you might miss it. That segment for Apple is the services. That's the part that they're really focused on growing.

That segment for Google is Google Cloud. That segment for Amazon is AWS and their services for ASML. That segment I believe is installed base management, sales, install based management, what they do in services after they install a machine. When you install a machine in this complex it requires constant maintenance. To have 100% up time or be running all the time is

incredibly important. If these machines are down for a few minutes, if not an hour, the company TSM will lose millions of dollars in the process because everything comes to a grinding halt if the EUV machine stops. So install based management is critical. It is mission critical to the companies that are operating ASML's machines. ASML's machines are mission

critical as well. When we look at ASML and we breakdown the install based management, I just want to show you the picture here to give a full idea of it. When you just look like this quarter by quarter, you can get an idea that it's growing over time. You can see install base management going up a little bit, but it's kind of difficult to tell. What I would do is I'd switch this to quarterly trailing 12

months. This gives a smoother more trend view because you can see over the trailing 12 months every single quarter. So when I look at this, you can also see the trend over time that it's going up. When we erase the other two segments, it becomes a lot more clear. The install base management is growing rather fast. In fact, in the trailing 12 months it grew 39.75%. Now it's not going to grow that fast forever, but it is going to grow 20% or above.

That's really fast growth for what I consider the most important aspect of this investment profile. Other things we can look at that management's doing that I appreciate. They repurchased €148 million. That's 9 million shares bought back so far at a total of 5.9 billion. So they spent $5.9 billion on share repurchases. They bought the dip. Management did exactly what investors wanted to do.

When a company has a big low, when the stock price goes down and the company still has strong fundamentals, it's generating revenue, generating free cash flow. Investors want them to buy the shares back when they're underappreciated, and that's exactly what they did. Now next, what they say here is also important.

The current $12 billion buyback program likely won't be completed by the end of 2025. The new program expected in January 2026. Now, they don't officially say this, but to me, the way that this comes across saying they won't finish the buyback program is now that the stock has surged up 38% in only two months, they're likely just tempering their buybacks. They're holding back a little bit. This is extraordinarily good

capital allocation. And it's much easier said than done to have a management team that first prioritizes high return investments within the company, developing, of course, their new products in their new road map, making sure they have ample capital for that. Then beyond that, looking for the best opportune times to buy back shares at depressed prices, which is exactly what they did earlier this year.

When the share price rockets up, maybe you hold back a little bit and look for other opportunities. So I like everything that I see here in terms of the future of what to look for going forward with ASML. We have a healthy backlog. We have lots of people lining up to order these machines, sometimes two years in advance. So it won't show up maybe in 2026 some of these orders, but some of them are just beyond that. Orders remain lumpy, not necessarily linear or predictive

for future quarters. And this is a distinction that Chris Hohn really nailed down. He said in terms of looking at future predictability of a company, it's not that important in knowing when you'll get the cash flows. What's important is knowing that you will get the cash flows eventually. In their 2026 road map, this is one of the the funniest things that the ESML management test said because it's almost exactly what they said three months ago

that tank the stock down 10%. But just the way that they rephrased it now has caused the stock to go up. They say right here the full 2026 guidance to be provided in January, but early signals are that next year will not be below 2025 in aggregate sales. OK. So they're saying next year the sales won't be below this year's sales. That's kind of a a reverse way, a backwards way of saying sales are going to grow.

They're going to grow next year. Now, what was the whole debate last quarter about ASML management saying that they couldn't confirm growth even though they're expecting growth? So management said we can't confirm growth and then the market freaked out. The stock slowed down to 730. Even though ASML back in this quarter said we expect growth, we just can't confirm it. Now they're saying early signals are that next year we're going to have growth.

This is how the market behaves in many cases. Of course there's times where there's sell off in companies because of totally valid, totally authentic reasons and then there's sell offs in companies because of completely invalid or superficial reasons, because of slight verbiage from management. And that's what happened with ASML 3 months ago. It sold off simply because management said something in a in a odd way, they said that

they couldn't confirm growth. Now management is basically saying the same thing in a slightly different way. In the stock is up 38%. So the sell off in ASML 3 months ago was entirely invalid. It was unjustified. It had nothing to do with the fundamentals. The ASML management is basically reiterating the exact same thing they said three months ago and here we are at above $1000 per share. If there's sell offs like that, those are times where you can take advantage to get into high

quality companies. ASML is winning. It's a stock and a company that are both winning. The fundamentals continue to move in a positive direction. The Moat, which is already considerably huge, is getting even wider. They know a broader customer base, meaning more diversified, less reliant on single consumers or single customers. They note that install based management is making up a greater portion of the company, which is very welcome for this company.

And overall, they note that the demand, the demand for their products in their future pipeline remains incredibly strong. They still have orders and although they're lumpy, they continue to have orders years in advance. So you have long term predictability in revenue and growth. And management noted with the stock price going up so fast that they're going to hold on to some cash. So in case there's a sell off again, they will buy the dip and cause the stock to come right back up.

This is a company that has downside protection. It's a company that's growing earnings fast. It's a monopolistic wide Moat company as of right now. I will continue to hold it in My Portfolio and if we get any, any dips at all in this company, I'll continue to add to the position. I see no weaknesses so far and I think this is incrementally bullish for the company. Now moving on, we get to some news here we have Brad Gerstner

going on to CNBC and explaining his thought process looking at the AI revolution. If you know Brad Gerstner, he's somebody that was an early investor in open AIA, private private fund investor in IT, and he's invested in NVIDIA and a lot of other technology focused companies, Snowflake and many others. He did have some skepticism for Google. He saw that massive growth in open AI and concluded that it would be destructive to Google. Like many others that has proved out to be wrong.

But overall, Brad Gerstner I think has been overwhelmingly right with his calls. He's been invested in the majority of companies that have done really well. And the first topic that he's asked about in this interview is the AI bubble, the bubble that we've been hearing about so

frequently right now. Anytime there's a revolutionary technology like artificial intelligence and there's lots of investors excited about it, the topic of a bubble continues to go up. And here's Brad Gerstner's response to being asked about the AI bubble. The word bubble is going to be raised at this conference multiple times, if it hasn't already. Last night. Are we in one? If we are, where are we, you know? AI. Or AI, some kind of economic

bubble, market bubble. I don't know what you think it is. And I will say, you know, you mentioned Paul Tudor Jones, He was on our air about a week and a half ago now and he said he thought we were in some kind of bubble and he put us on a comparable basis. He thought of October of 1999, which was an interesting moment because the market still had 40% to go.

That's right. Well, first, you rarely have a bubble when the hottest book in New York is about a stock market crash and everybody who comes on the show talks about a bubble. It's a bubble and bubble. Howard Marks said. You know it's too early because everybody's talking about a bubble. If you look at if you look at multiples as an example. We'll go ahead and pause it there. Now, his first argument against us being in a bubble is that you rarely have a bubble.

When people write books about a bubble, when everybody's talking about a bubble, after all, you know, how could we be in a bubble if everybody thinks we're in a bubble? That's kind of an argument that sounds like it would be correct. I think intuitively that's what people would believe. That's at least what I would believe, is that if everybody thinks it's a bubble, it can't really be a bubble because all of us would realize if we're we're discussing bubbles, we'd

realize that we're in one. But if you actually look at this subject, which I have, I've looked at it very in depth in every single massive bubble throughout human history, there was massive amounts of discussion about bubbles. Many people recognized that things were out of control. Many people wrote books and wrote articles and wrote research thesises about the bubble that they were in before

the bubble popped. So this is one of the arguments that again, it, it sounds good and I'm not trying to be. I I like Brad Gerstner, I'm not trying to be hard on him here. But it's just totally false. If there's a bubble, it does not mean the bubble doesn't exist because lots of people are discussing it. And I can show counter examples

to each one of these. For example, he references Howard Marks. Howard Marks has never once said that if lots of people talk about a bubble, that means we're not in one. He never made that argument. Howard Marks actually wrote about the bubbleinthe.com bubble before it popped. Howard Marks is one of the ones talking about bubbles while we're in one. This is Barton Briggs, the chairman of Morgan Stanley, and this was beforethe.com bubble. Right before it.

He says quote, the history of manias is that they have almost always been solidly based on revolutionary development that eventually change the world. Without fail, the bubble stage of these crazes ends in tears and massive wealth destruction. Many of the professional investors involved in these areas know that what is going on today is madness. However, they argue that the right tactic is to stay invested as long as the price momentum is up.

So what does he say here? This is the chairman of Morgan Stanley during a time period of a bubble, says many professional investors involved in these areas know that what's going on today is madness. Again, lots of people are aware that you're in a bubble. When you're in one, they just argue the best thing to do is to play the momentum game. As long as prices are going up, you don't want to be left behind. When momentum begins to ebb, they will sell their position and escape the carnage.

Since they have a very large position and since they all follow the same momentum, I suspect they are deluded and thinking they'll be able to get out in time because all the other momentum investors will be doing the same thing. So if everybody tries to sell the same stocks at the same time, only a couple of them are going to be first and everybody else is going to be second or third and sell at much, much

lower prices. Howard Marks notes that these type of bubbles follow the same blueprint. The positives behind stocks can be genuine and still produce losses if you overpay for them. So having a great company is not enough. We need to pay the right price even for a great company. Those positives and the massive profits that seemingly everyone else is enjoying can eventually cause those who have resisted participating to capitulate. So this is another aspect of a bubble.

When you're looking at the bubble in 2021, for example, I knew that that was a bubble. I had full knowledge of it before it happened. I had knowledge of it that we were in it. This wasn't something where it was special of me. It didn't take a genius to figure out that Zoom stock wasn't worth a trillion dollars. All of these companies, every single one of the companies, and Kathy Woods ETF at the time, raced up without any thought of fundamentals. All of it was momentum, price,

disruptive innovation. Investors were tripping over themselves to buy these companies. I created multiple warnings about this. This bubble warnings about Kathy Wood warning about ARK Invest, seeing all these different retail investors piling into this bubble. And although they're making gains for a time, eventually it collapsed. And the problem was like Howard Marks highlights here is that if you were sitting on the sidelines and you're watching ARK innovations go up and up and up.

If you're watching Kathy Wood's ETF, all of them just make hundreds of percentage of return while your your portfolio was going up 10 or 20%. You would eventually capitulate that the massive profits that everyone else is making in all these momentum stocks eventually causes you to abandon your well thought out strategy to capitulate and buy into those

same momentum names. Now #3 He says a top in a stock group or market occurs when the last holdout will become a buyer does so. So when finally the last person that's that's resisted, that's eventually going to capitulate, when they finally buy that stock and there's no one else behind them to buy it at a higher price, that is the timing of the top of the bubble. It's often unrelated to fundamental developments. It's simply human psychology.

January 2nd, 2000. Many people talk about bubbles while we're in bubbles. That's happened every single time. In fact, we have entire research institutions, Bernstein Research, that calledthe.com bubble in 1999. They said the performance of momentum anomalies continues to set records. The extreme nature of this behavior suggests it could reverse abruptlythe.com bubble was widely discussed as a bubble for many years preceding it. It was a widely debated topic.

So the notion that we're not in a bubble because people are talking about it is totally false. That has no bearing on whether or not we're in a bubble. And in some cases, of course, we do talk about bubbles when we're not in one and hopefully that's the case today. Now one thing that Brad Gerstner mentions that I think is a much stronger argument that I tend to agree with him. Part of being in a bubble means incredibly high valuations, valuations that are unreasonable.

Like we saw in 2021, many of the so-called disruptive companies had valuations that were incredibly detached from their fundamentals. They were not based in reality whatsoever. It was a bubble waiting to pop. Great. He was talking about 50 times

trailing PE for NVIDIA. It's a it's 25 to 30 times on a forward PE. That's not the stuff that bubbles are generally made of. But certainly the further and further you go out on the risk curve, Andrew, you will find things that make you scratch your head. You say I wouldn't have done that deal. And they're going to be meme stocks that certainly, you know, have no revenue, Becky, and, you know, in the quantum space or whatever where you say that valuation doesn't make any

sense. At a high 20s PE doesn't feel much like a bubble. But I've noticed that every time tech investors want to say that we're not in a bubble, they use NVIDIA as the go to example. For whatever reason, they're not using the example of Palantir. Isn't Palantir the messy of AI? The leader of AI, The company that's emblematic of the AIAI tech sector? Palantir trades up valuationsthatwouldmake.com bubble companies blush.

It trades at a 540 trailing PE, a price to sales of above 100, now at 117. A free cash will yield when you adjust for a dilution of .24. This is in a category that has never happened ever throughout history. When we even compare it to the.com bubble, We can take a look at the valuations. Here We have the most egregious

ones. The price to trailing earnings ratio of American Airlines was 540, but the price to sales is much lower, 41 compared to 110. In fact, looking at every single company on this list, there is not one that comes close to the valuation of Palantir on a price to sales basis. Not even close. It is around 4 times the highest valued company in the.com bubble. Maybe it will be justified, Maybe Palantir will be just fine because it is a different company than all those in

the.com bubble. But it is a much harder 1 to defend the valuation of it, to say that this company is being valued efficiently and fairly and strictly on the fundamentals without any type of exuberance. When you trade at price to sales above 100, that is much more difficult to defend than the valuation of NVIDIA. So there is some selective bias

going on here. Brad Gersner highlights that instead of focusing on the valuations of some of the companies that are crazy in this market, to rather focus on the developments of artificial intelligence and where you can find still investment opportunities. That makes sense because long term AI is real. It is like the Internet and it's going to be massively transformational. The bigger question is this is the phase shift associated with AI?

Is the transformation of all computing with now computer assisted intelligence? Is it as big as the Internet? And I would argue that it's as big as the Internet. And if you spend all your time hand wringing like many people did in 2001 and 2002 about the Internet, saying I told you so, they missed the next 20 years of compounding in Amazon, in Google, and all these big. Ones investors can successfully navigate through bubbles by avoiding the most exuberantly

priced companies in the market. We don't always get it right, but that's the goal. And if we have a diversified portfolio, we should be successful in accomplishing it. Now moving on, we get to another dynamic that's changing the

market over time, and this is agentic commerce. It's something that Open AI introduced with their new API. It gave the ability for top websites to integrate directly within Open AI's user interface, their ChatGPT interface. For example, instead of going to the Uber app to book an Uber, you could do it right within ChatGPT and you could use the AI to like ask questions and interact with Uber. And Uber is connecting with Open AI to do this.

They're giving them permission. They're working together. But it was the same thing for Expedia and Booking Holdings. It's the same thing for Zillow. All of these companies integrated directly within Open AI ChatGPT so that they had this nice integration. Mark Mahaney believes that this won't really disrupt these companies means integrating, rather it will grow the overall total addressable market and lower their customer acquisition cost there there.

May be what I'm really interested in is you had a slew of announcements just in the last 10 days. You had Expedia, Uber, Spotify, booking.com, Walmart, they're all integrating with Chachi BT. What a sign of the times. And so it is emerging. It's still small and 800 million is still small. You've got 2 to 3 billion person assets with with, with, with Google and with Meta.

But, you know, watch this space. And if those companies are seeing early on that they need to be integrated with, with ChatGPT, I think you're going to see a lot more companies come on. And there's a chance here that this dramatically changes the Internet landscape in a tech landscape, you know, in the space of the next two or three years. Well, he says that it will dramatically change the landscape, but he hasn't told us whether or not we should be concerned about this.

Actually you should think about it more positively for a name like a booking in Expedia and eventually Amazon too probably and and a Walmart. This is just another customer acquisition cost channel. Who's paying who? Because we, we just had another retail analyst who was here saying they look, these retailers were all slow when the Internet first launched. They let all these E retailers come in and eat their lunch. They don't want to get caught in

the cold again. Are they paying ChatGPT for this? And is it a lot of money? Eventually they will. I think what ChatGPT is going to do is this is like Mark Zuckerberg in private. Build out the user base, build out the engagement and charge them. But a lot. Later. Mark Mahaney believes agentic commerce is the next big iteration, the next big thing.

All these type of companies, whether you're Spotify, a Netflix, say Uber or an Amazon, you're all trying to become more agentic with your shopping experience.

Now, Next up, we have news that Waymo, Google's Waymo is at it again. They're marking a new place that they're going to be opening up in 2026. This time it's London. They say we're bringing our fully autonomous ride hailing service across the pond where we intend to offer rides with no humans behind the wheel in 2026. This company is, it's moving fast. Waymo is actually scaling and they're doing this rather

quickly. They say that we're excited to support London's extensive network of bus to bike and pedestrian infrastructure with our ride hailing service, which will be available via the Waymo app. So in this case there is no indication that they're they're partnering with an Uber, they're again going get a loan. And this is one of the advantages that Google has with Waymo. They don't have to partner with anyone else because the Waymo app is so good.

We can look at how many people use it, the star ratings, how

much people like it. They love booking Waymo's through the Waymo app. Now moving on, we get to the news, and this is somewhat comical, I'd say disappointing but also comical news about Salesforce. This stock is so hated by the market, it has such negative

sentiment. It's considered so at risk by artificial intelligence and disruption that investors want nothing to do with it. As noted by this latest news, Salesforce is expanding its AI partnership with Open AI and a Tropic, integrating their latest models into Agent Force 360, including deeper Chachi, PT and cloud integrations to accelerate AI agent adoption. So they're going into partnership with Open AI. And in every single case, we've seen that the stocks surge upwards.

The company goes up 10 percent, 20 or 30%. In this case, after Salesforce announced this partnership with Open AI, the stock went down. How does a stock go down after you partner with Open AI? That's almost impossible. Like Salesforce really accomplished the impossible. So I guess they we should be giving them an award here. I should be giving them an award for accomplishing the impossible. This should be considered one of the fail of the weeks. It is basically a fail of the

week. Salesforce partnered with Open AI and the stock went down. Just unbelievable that this could happen. But either way, it's also entirely believable because again, everyone hates Salesforce. It's a common theme that we've seen. The reason that no investor likes Salesforce today is it's considered an antiquated software company. Nobody wants to invest in it because it's that potential disruption from artificial

intelligence. Salesforce has not yet convinced investors that it will continue to grow at a quick pace for a long period of time. And this is a debate that will happen every quarterly report. Either Salesforce continues to grow, either it continues to generate more cash flow, either the fundamentals continue to improve, or the stock continues to go down. If Salesforce has enough consistently good reports, the sentiment should slowly

breakdown. Investors should turn a little bit more positive, but it will all be in the numbers. But I'll personally continue to hold my shares as long as the fundamentals continue in the positive. Now that's gonna be it for this episode. Hope you enjoyed. See you in the next one.