The Roundhill Memory ETF (DRAM) has seen a sharp uptick in investor inflows as leading memory chip stocks stage a recovery from recent lows. The fund, which tracks companies in the dynamic random-access memory (DRAM) and NAND flash sectors, rose to $59.23, a 20% gain from its monthly trough.
Among the key beneficiaries of the rally are South Korea's Samsung Electronics and SK Hynix, which have climbed over 12% and 14%, respectively, from their lowest points this month. U.S.-based Micron Technology, SanDisk, and Seagate Technology have also participated in the rebound, alongside Japan's Kioxia.
The upturn reflects a broader dip-buying sentiment, with analysts at UBS noting that demand for compute continues to outstrip supply. In a recent note, they stated that capacity constraints along the supply chain are unlikely to ease quickly, and they see no signs of panic in the semiconductor or memory industries. Hyperscalers, including Alphabet, have signaled continued aggressive capital expenditure, with Alphabet committing $205 billion for the year, much of it directed at data center expansion.
Wall Street remains broadly bullish on the sector. The average analyst price target for Micron stands at $1,268, well above its current $960, with the most optimistic forecasts from DA Davidson, Susquehanna, and Barclays targeting $2,000. SanDisk enjoys unanimous buy ratings, with an average target of $1,820 and Susquehanna's Mehdi Hosseini projecting a rise to $3,250.
These bullish calls have fueled inflows into the DRAM ETF. According to ETF Db data, the fund has attracted over $10 billion in the past month alone, with three-month inflows reaching nearly $24 billion. Total assets under management now stand at $23 billion.
Investors are now looking ahead to a busy earnings season that will provide further clarity on demand trends. Alphabet has already reported, while Amazon, Meta Platforms, Apple, and Microsoft are due next week. Seagate Technology and SK Hynix will report on July 28 and 29, respectively, followed by Kioxia on July 31 and SanDisk on August 5. Other constituents, including Western Digital, GigaDevice, and Nanya Technology, will also release results soon.
Despite the recent rally, the DRAM ETF faces several significant risks. The most pressing is concentration: three of the fund's top holdings account for over 70% of its assets. The memory industry is also highly cyclical, as demonstrated in 2023 when oversupply led to sharp revenue declines across the sector. Additionally, any pullback in hyperscaler spending could dampen demand. Some analysts caution that the current rebound may be a dead-cat bounce, a temporary recovery within a longer-term downtrend.
Related reading: Kospi Surges 3% as Alphabet's $200B AI Capex Plan Fuels Asian Chip Rally and Micron Surges 12% as BofA Sees Open-Source AI Models Boosting Memory Demand.
This article is for informational purposes only and does not constitute financial advice.
