The Roundhill Memory ETF (DRAM) has dropped to its lowest level since early May, falling more than 43% from its 2024 peak. The sell-off has accelerated this week after SK Hynix, one of the fund's top holdings, reported earnings that disappointed investors and signaled a sharp increase in capital spending.
SK Hynix shares slid to 1.25 million won in Seoul, their lowest since April, after the company announced plans to boost capital expenditure by 50% to $31 billion. While revenue and margins improved, profit fell short of analyst estimates. The company attributed the growth to sustained demand for memory products, which it expects to continue in the near term.
The broader sell-off in memory stocks has been exacerbated by a deleveraging wave in South Korea, where both retail and institutional investors have been unwinding heavily leveraged positions. A senior South Korean minister recently apologized as many investors suffered significant losses.
SK Hynix accounts for 22% of the DRAM ETF, making it the third-largest holding. Micron Technology and Samsung Electronics represent 27% and 24% of the fund, respectively. All three have declined sharply in recent weeks. Micron is down 35% from its high, while SanDisk, Western Digital, and Seagate Technology have all fallen by double digits.
Kioxia Holdings, another major memory player, has plunged 65% from its 2024 peak, with its decline accelerating ahead of its earnings report. Samsung Electronics has also dropped amid the South Korean deleveraging and ahead of its final second-quarter results.
Despite the steep price declines, investors have continued to pour money into the DRAM ETF. Data shows the fund attracted $160 million in inflows on July 27 alone and has seen over $7.4 billion in inflows over the past month, with only one day of outflows during that period.
Analyst sentiment remains broadly bullish on the top memory names. DA Davidson and Susquehanna have raised their price targets on Micron to $2,000, well above the current $820. The average analyst estimate for Micron stands at $1,268, implying 54% upside. All analysts covering SanDisk rate it a buy, with Susquehanna targeting $3,050, Wells Fargo at $1,620, and Evercore at $3,100, compared to the current $1,278.
The optimism is largely tied to expectations that artificial intelligence spending will continue to drive demand for memory chips. Analysts estimate that Amazon, Google, and Microsoft alone will spend over $750 billion on capital expenditures this year, with total spending projected to exceed $5 trillion by 2030. A significant portion of that is expected to flow to memory companies.
For more context on the broader chip sell-off, see our coverage of Nasdaq slides as chip stocks extend selloff. Additionally, read about SK Hynix, Samsung extend losses for further analysis on the South Korean market dynamics.
This article is for informational purposes only and does not constitute financial advice.
