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April 11, 2025
The Lithography Inflection Point - How Two Different Approaches to EUV Could Reshape the Semiconductor Industry
By
Kristal Investment Desk
Palantir's Q4 results showcase the company's dominance in enterprise AI applications, with revenue beating estimates by 6% and U.S. commercial revenue surging 52% year-over-year. The star performer remains its Artificial Intelligence Platform (AIP), which nearly doubled its previous record for total contract value to $800 million. While execution is stellar, with six consecutive quarters of accelerating growth and expanding margins, the valuation at 125x 2025 EBIT remains a concern. The stock's rich multiple demands continued outperformance, making it a compelling company but a challenging investment at current levels.
PayPal delivered a solid Q4 with revenue beating estimates by 1.2%, though guidance disappointed with Q1 revenue growth projected at 0-3%. The miss largely reflects ongoing Braintree contract renegotiations, which will reduce 2025 revenue growth by 5 percentage points but add 1 point to transaction margin growth. Venmo shows promising monetization with 40% Y/Y debit TPV growth. Trading at 16x 2025 earnings, PayPal's valuation appears undemanding, but execution on branded checkout growth remains critical for the investment case.
Amazon delivered solid Q4 results but tested investor patience with conservative Q1 guidance. While revenue slightly beat expectations (+0.3%), AWS missed marginally (-0.1%) due to capacity constraints rather than demand weakness. The real story lies in the staggering $104 billion CapEx guidance for 2025, primarily earmarked for AWS infrastructure. This represents both opportunity and risk - a massive bet on cloud computing's future that could either cement AWS's dominance or pressure margins if demand falters. However, with eight consecutive quarters of margin expansion in North America and International segments, Amazon has earned some benefit of doubt. Trading at 40x 2025 earnings with 22% compound growth expected, the stock isn't cheap but remains compelling for those betting on cloud computing's secular growth.
Alphabet's Q4 showed resilience in its core search business while advancing its AI agenda. Despite a slight revenue miss (-0.2%), search revenue beat estimates (+1.3%), demonstrating the segment's durability amid AI competition. Cloud growth hit some supply constraints but maintained 19% Y/Y FXN growth. The company's Gemini 2.0 launch marks its serious entry into the "Agentic Era" of AI, with early reviews "extremely positive." At 21x 2025 earnings with 14% compound growth expected, Alphabet offers a relatively conservative way to play both digital advertising and AI transformation.
Spotify's transformation from growth at any cost to profitable expansion continues to impress. Revenue beat estimates by 2.1%, while EPS swung from -$0.36 to $1.76 year-over-year. The company added 35M monthly active users versus 25M guided, demonstrating strong product-market fit. With gross margins expanding and operating leverage improving, Spotify's pivot to profitability appears sustainable. At 56x 2025 earnings, the valuation remains rich but justified by the company's market leadership and improving economics.
Cloudflare's Q4 results highlight its successful sales force transformation, with revenue beating estimates by 1.7%. The company's success in landing larger customers - adding 47% more $1M+ customers in 2024, with half coming in Q4 - demonstrates strong enterprise traction. While guidance appeared conservative, management's confidence in accelerating growth and AI opportunities suggests potential upside. Trading at 188x forward earnings, Cloudflare remains priced for perfection, but its execution and market opportunity support the premium.
Disney's Q4 showed broad-based strength with revenue beating estimates by 0.5% and EBIT surpassing expectations by 18%. The streaming business hit an inflection point, turning profitable year-over-year while maintaining subscriber growth. The experiences segment demonstrated resilience despite weather impacts, and the new Disney Treasure cruise ship launch exceeded expectations. Trading at 20x forward earnings, Disney offers a compelling mix of streaming potential and proven entertainment assets.
AMD's Q4 results showed mixed signals, with overall revenue beating estimates by 1.8% but data center revenue missing by 6%. While client and gaming segments outperformed, the critical data center business faces near-term headwinds from capacity constraints. Management remains confident in the multi-year data center opportunity but needs to prove it can close the gap with Nvidia in AI acceleration. The company's positioning in the new AI computing wave remains uncertain, despite strong execution in its traditional CPU business.
Uber delivered strong Q4 results with bookings beating estimates by 1.8% despite larger-than-expected forex headwinds. The company's positioning in autonomous vehicles appears increasingly strong, with management highlighting how Uber's network can help optimize AV fleet utilization. Platform integration with various AV players and strong core metrics suggest a company executing well on both current operations and future opportunities. At 18x 2025 FCF with 24% expected growth, valuation appears reasonable given the company's market position.
The recent breakthrough in AI model training efficiency by DeepSeek has prompted strategic responses from major cloud providers. Rather than viewing this as a threat, Amazon, Google, and Cloudflare are embracing the development, seeing it as catalytic for AI adoption. Amazon's Andy Jassy drew parallels to AWS's impact on infrastructure costs, suggesting cheaper AI training will expand the total market. This perspective appears sound - historical patterns show technology cost deflation typically expands rather than contracts total spending.
Pershing Square's substantial investment in Uber marks a significant vote of confidence in the ride-hailing leader's autonomous vehicle strategy and operational improvements. Uber's recent results support this thesis, with strong execution across core metrics and promising developments in its autonomous vehicle partnerships. The investment suggests smart money sees Uber as well-positioned to benefit from the transition to autonomous vehicles while maintaining profitability.
The week's data painted a picture of resilient output alongside modest labor market softening. Manufacturing showed unexpected strength, with both PMI and ISM readings moving above 50, indicating expansion. However, the labor market data suggests some cooling, with nonfarm payrolls missing expectations significantly at 143,000 vs 169,000 expected. The unemployment rate's slight improvement to 4.0% amid lower job creation suggests some labor market rebalancing.
Inflation signals remain mixed, with unit labor costs rising 3% Q/Q versus 3.4% expected, while average hourly earnings surprised to the upside at 0.5% M/M versus 0.3% expected. The Michigan 1-year inflation expectations at 4.3% (vs 3.3% expected) showed a notable political skew, with expectations varying significantly based on party affiliation.
Fed futures continue to price in a >90% probability of rates remaining steady at the next meeting, with expectations for 1-2 cuts this year. The data supports this cautious approach, suggesting no immediate need for aggressive policy changes while maintaining flexibility for modest easing later in the year.
By
Kristal Advisors
February 8, 2025
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April 11, 2025
By
Kristal Investment Desk
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We are licensed in Singapore, Hong Kong and India. Kristal Advisors (SG) Pte. Ltd. presently operates under the CMS license by the Monetary Authority of Singapore (MAS). Kristal Advisors (HK) Ltd is licensed and regulated by the Securities and Futures Commission (SFC) to carry out Type 4 and Type 9 regulated activities and is not involved in the discretionary management of any collective investment scheme. Kristal Advisors Private Ltd. presently operates as a Registered Investment Advisor under the jurisdiction of the Securities and Exchange Board of India (SEBI).
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Copyright © 2023 Kristal Advisors (SG) Pte. Ltd. UEN: 201711235E
WE ARE LICENSED IN SINGAPORE, HONG KONG, ABU DHABI, AND INDIA. KRISTAL ADVISORS (SG) PTE. LTD. PRESENTLY OPERATES UNDER THE CMS LICENSE BY THE MONETARY AUTHORITY OF SINGAPORE (MAS). KRISTAL ADVISORS (HK) LTD IS LICENSED AND REGULATED BY THE SECURITIES AND FUTURES COMMISSION (SFC) TO CARRY OUT TYPE 4 AND TYPE 9 REGULATED ACTIVITIES AND IS NOT INVOLVED IN THE DISCRETIONARY MANAGEMENT OF ANY COLLECTIVE INVESTMENT SCHEME. KRISTAL ADVISORS PRIVATE LTD. PRESENTLY OPERATES AS A REGISTERED INVESTMENT ADVISOR UNDER THE JURISDICTION OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI). KRISTAL.AI MIDDLE EAST LIMITED IS LICENSED AND REGULATED BY THE FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) FOR CAT 3 A LICENSE.
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