‘Biggest bottleneck in the AI buildup’ fuels DRAM ETF to record
Roundhill Memory ETF (DRAM) According to TMX VettaFi, assets under management reached $9.8 billion in 43 days; This is the fastest pace ever for an exchange-traded fund.
The rapid growth is down to a limited number of companies making high-bandwidth memory, or DRAM, chips, the CEO of Roundhill Investments told CNBC’s “ETF Edge” program ahead of Thursday’s milestone. They are considered an integral part of the artificial intelligence revolution.
“Investors are waking up to the fact that the biggest bottleneck in the development of AI is actually memory chips,” Dave Mazza said Monday. he said. “There’s an incredible amount of supply and demand imbalance in memory, and that’s one of the reasons why stocks have performed so well.”
Mazza notes that only a small number of companies are involved in making high-bandwidth memory chips.
“This is an area where memory has historically been incredibly cyclical. We’ve seen boom and bust cycles. And one of the reasons why it’s so cyclical is because memory is actually everywhere, from your smart TV to your phone in your car,” he said. “What has changed is actually the growth and development of data centers and artificial intelligence.”
Mazza predicts that the supply and demand imbalance could extend into 2028 due to AI demand and data center hyperscaler nature.
‘I’m shocked’
Todd Rosenbluth of TMX VettaFi reacted to the popularity of DRAM in an exclusive note to CNBC: It is considered the hottest ETF since the Bitcoin craze.
“I am shocked by the rapid adoption of the ETF, as demand for memory stocks through the ETF has not been suppressed as it has been with exposure to Bitcoin,” the firm’s head of research and editorial wrote on Thursday. “Thematic ETFs continue to gain traction by offering access to high-growth companies.”
Citi Research’s Drew Pettit is confident the strong trend will continue.
“Price momentum has support of earnings momentum. So this is where we’ve seen the best earnings revisions this year in the United States and globally,” the firm’s director of research for U.S. equity and ETF strategy told “ETF Edge” in the same interview with Mazza on Monday. “If we’re up 300%, but your earnings expectations increase six to eight times over the next few years, it still returns to us at a reasonable price.”DRAM remains under pressure in Friday’s trading. But it has increased by more than 80% since its inception.
DRAM is under pressure during Friday’s trading. But it has increased by more than 80% since its inception.
