JPM Silver Sunset

Scott Silver - Specialist Sales - European TMT AC ( Europe Specialist Sales JPMORGAN J.P. Morgan Securities plc 27 July 2026

Silver Sunset: Top EU TMT Talking Points Today - Let’s Discuss Scott Silver

Today’s discussions were dominated by four key themes. Firstly, ASML remained firmly in focus after headlines suggesting China is moving closer to producing five domestically developed DUV immersion tools, sending the shares down around 7%, although the overwhelming feedback from investors was that the story is largely being viewed as another example of clickbait rather than a material change to the long-term investment case. Secondly, I published the results of my buy-side survey ahead of ASM International’s results tomorrow, with sentiment highlighting an increasingly uncomfortable reality: investors are becoming less focused on whether companies can beat expectations, and more concerned that even strong fundamentals are failing to translate into positive share price performance. The recent reactions across ASML, TSMC, VAT and BESI have reinforced the view that, in the current tape, getting the numbers right is no longer enough to get the stock right. Elsewhere, conversations on Wolters Kluwer continued to build following Daniel Kerven’s recent upgrade to Overweight, with investors increasingly reassessing the name after a prolonged period of subdued sentiment. Finally, Vodafone delivered a better-than-expected set of headline results, although investors questioned whether the quality of the beat justified the stock’s roughly 5% rally, leaving opinion somewhat divided despite the positive price reaction.

More broadly, today marked yet another session where the ongoing momentum unwind continued to dominate trading, with AI beneficiaries once again underperforming while the so-called AI losers materially outperformed. SAP extended Friday’s strong gains with another 7.5% rally, while higher-growth technology names such as Nokia continued to come under pressure. The prevailing view across investors remains that this is still primarily a positioning and momentum-driven rotation rather than one driven by changing fundamentals, which is consistent with the flows we’re seeing across the desk. The challenge remains that stocks delivering strong operational performance are simply not attracting meaningful support, leaving investors increasingly questioning what catalyst will ultimately be required for the market to begin underwriting higher-growth semiconductor and technology names once again.

Quick Silver: Thoughts & Debates ASML (OW): China DUV Coming SOON (again?) - The Information is reporting that a Chinese state-backed company has begun manufacturing immersion DUV lithography tools, with plans to produce around five systems this year and c.20 in 2027 for domestic customers including SMIC, Hua Hong and CXMT. While the headlines are clearly negative for ASML sentiment and reinforce China’s push towards lithography self-sufficiency, the key issue remains whether these tools can deliver the stability, yield and throughput required for high-volume manufacturing. China has been producing lower-end i-line lithography tools for many years, yet these have not seen meaningful adoption in front-end semiconductor manufacturing. Until there is evidence that these new immersion DUV systems are HVM-capable, the announcement is likely to have a bigger impact on sentiment than on ASML’s fundamentals. The long-term strategic risk is clear, but there remains a significant gap between producing a working tool and producing one that can reliably support leading-edge chip production at scale. Feedback generally view this as more unhelpful “clickbait” with one investor stating “did we forget that every other WFE name already has competition in China for China? And they all seem to be doing just fine... And that assumes these tools are real and not just cardboard stand”. ASML delivered more than we could have hoped for the other week but as we have seen across the board investors are proving increasingly unwilling to reward anything short of perfection. Getting the numbers broadly right is no longer enough. In many cases, investors are receiving the…