2 Stocks to Buy Before SpaceX IPO!!

Key Concepts

• SpaceX IPO: A highly anticipated market event projected for summer 2026 with a target valuation of $1.75 trillion to $2 trillion.
• Vertical Integration: SpaceX’s strategy of bringing component manufacturing in-house to control margins and timelines.
• EUV Lithography: Extreme Ultraviolet lithography; a specialized process using lasers to print microscopic circuits on silicon wafers, essential for sub-7nm chip production.
• Foundry: A semiconductor fabrication plant where chips are manufactured.
• Tech Sovereignty: The global trend of nations investing in domestic semiconductor supply chains to reduce reliance on foreign manufacturing.
• Trailing P/E Ratio: A valuation metric (Price-to-Earnings) used to assess if a stock is overvalued or undervalued relative to its earnings.

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1. TSMC (Taiwan Semiconductor Manufacturing Company)

Main Thesis: TSMC is positioned to benefit from the massive compute requirements of AI companies (like OpenAI and Anthropic) and SpaceX’s long-term ambitions, which include potential data centers in space.

• Key Arguments:
  • Supply Constraint: The market is currently supply-constrained for high-end chips (CPUs, GPUs, DPUs). As the primary manufacturer, TSMC captures the value of this shortage.
  • Operational Risks: While Elon Musk has announced a partnership between SpaceX and Tesla to explore chip manufacturing, the barrier to entry is extremely high due to R&D costs and equipment requirements. This is viewed as a long-term risk (3+ years) rather than an immediate threat.
  • Geopolitical Vulnerability: 80–85% of TSMC’s capacity is in Taiwan. To mitigate this, TSMC is actively expanding its manufacturing footprint in the U.S. (e.g., Arizona) to satisfy customer demands for geographic diversification.

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2. ASML Holding (ASML)

Main Thesis: ASML acts as the "gatekeeper" of the semiconductor industry, holding a global monopoly on the EUV lithography machines required to manufacture cutting-edge chips.

• Key Arguments:
  • Monopolistic Power: ASML is the sole producer of EUV machines. Any chip manufacturer producing below a 7nm node must utilize ASML hardware.
  • Financial Performance: Reported Q1 results included ~€9 billion in net sales, a 53% gross margin, and nearly €3 billion in profit. They hold a €40 billion order backlog, providing high revenue visibility.
  • Pricing Power: With machines costing over $350 million each, ASML maintains significant pricing power, justifying its high trailing P/E ratio (over 50) as a premium for "structural certainty."
  • Export Controls: While restrictions on shipping advanced systems to China exist, the company argues that the global push for "tech sovereignty" (new fabs in the U.S., Europe, and Japan) creates a demand wave that offsets restricted markets.

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3. Synthesis and Conclusion

The upcoming SpaceX IPO is expected to draw significant liquidity into the aerospace and deep tech sectors. However, the speakers argue that the most effective investment strategy is to avoid the "hype" of the IPO itself and instead focus on the foundational "picks and shovels" of the tech stack.

• TSMC provides the manufacturing scale necessary for the AI and space-compute revolution.
• ASML provides the essential, monopolistic technology required for TSMC and other foundries to function.

Final Takeaway: Investors should prioritize companies that hold structural monopolies and are essential to the global tech infrastructure, rather than chasing the volatility of a high-profile IPO. The long-term thesis for both TSMC and ASML remains robust, supported by the ongoing global expansion of semiconductor manufacturing capacity.