TMTB EOD Wrap: What's going on with memory

The AI Vibes are back! QQQs +88bps led by semis, particularly the sectors at the top of the pecking order, which remains similar to where we last left off in December: DRAM > Optical > HDDs > NAND > Power > ASICs > GPUs > Networking (probably should throw semi cap in there right after NAND….) Big moves in these stocks: SNDK +28%; WDC +17%; STX +14%; LITE +11%; MU +10% with all these stocks sitting at ATHs and it’s hard to imagine there was any wobbling in AI vibes over the last several months looking at the charts. The conversations relayed to me at CES sounded similar: everyone loves memory (I heard $60-$70+ EPS numbers being throwing around for MU, that’s up from $50+ I was hearing from uber bulls in Dec), everyone wants analog now, everyone’s new love is semicap with the inflection to come, and everyone is frustrated with NVDA.

Basically, the sectors with tight supply/demand dynamics and increasing prices are where investors want to be - both fast money and more medium/longer term investors (optical + memory + HDDs the favorite ways to play it). Lots of talk today (as has been the case for the last several months) from investors around the historically cyclical memory/HDDs continuing to act and be deserving of multiples one would give a secular grower, as that’s what they’ll look like over the next few years. As us old tech hands remember, memory/storage names used to get low multiples because (1) pricing was violently cyclical, (2) supply was prone to overbuild, and (3) end demand was heavily PC/phone/consumer. This cycle feels and is different: AI/DC spend that doesn’t look like it will peak until late ‘27 at the earliest, supply structurally harder to add, players more rationale (so far) and earnings tied to higher value products (HBM, high-end enterprise SSD, differentiated HDD tech like HAMR) vs commodity bits.