Bridgewater bets $1 billion on shorting ASML Holding N.V., while J.P. Morgan, Credit Suisse, and Morningstar all remain "buy"?

According to the data company Breakout Point's calculations, Bridgewater, the world's largest hedge fund, has bet $6.7 billion to short European stocks, including a $1 billion short position in the global lithography giant and Dutch semiconductor supplier ASML. It's unclear whether these short positions are pure shorting or a hedge against other bets. Let's take a look at the valuation of ASML by several major investment banks.

ASML is in a sweet spot with the main semi equipment technology transition being the shift to EUV in logic, followed by shift to EUV in DRAM. These trends will mean that lithography will now secularly increase as a % of front-end semi equipment spending. ASML is the sole supplier of EUV tools and its market share in litho segment should exceed 80-89% it has been in the last decade driven by higher EUV ASP. With EUV upgrades still ahead & the semi industry shrink highly dependent on ASML it is too early to get on a bearish train. We remain "Overweight".

Near term demand remains strong and barring any significant logistics/supply chain disruptions, mgmt remains confident on delivering on 2022 outlook; Given the constrained supply situation, long lead times on lithography tools and associated prepayments, ASML’s customers are unlikely to cut/pushout orders unless they expect a prolonged recession.

We believe leading-edge demand for ASML’s EUV lithography tools will prove relatively resilient to a potential downturn in the chip market. With TSMC, Intel, and Samsung all vying for process leadership, we expect ASML to be a primary beneficiary thanks to its EUV dominance. ASML is trading in 5-star territory and at an attractive discount relative to our €696 fair value.