Tech & AI
Roundhill Memory ETF loses investor money despite strong Micron results
Investors pulled money from the Roundhill Memory ETF faster over the past month, ETF Database data shows. AI bubble worries hit memory stocks even after Micron and SanDisk reported strong results.
Quick Read
- ETF Database data shows investors pulled money from the Roundhill Memory ETF faster over the past month.
- Micron, SanDisk and Western Digital trade far below their 52-week highs despite strong revenue and profit.
- Worries about an AI bubble and possible memory oversupply have weighed on the stocks, even as the companies raised guidance.
- Micron announced a new share buyback starting in December.
What is happening to the Roundhill Memory ETF?
The Roundhill Memory ETF (Cboe BZX: DRAM), ticker DRAM, holds memory chip makers such as Micron, SanDisk, Western Digital (Nasdaq: WDC), Samsung Electronics and SK Hynix. An ETF, or exchange-traded fund, is a basket of stocks that trades like a share.
Why it matters: Investors have been pulling money out at a faster pace, ETF Database data shows. The fund's assets now sit well below their peak, and it has given back the gains it made since its April launch.
By the numbers: The fund did bounce on Friday. It rose 6.2% to close at $39.29.
Why are memory stocks falling after strong results?
The selling sits in the stocks the fund owns. Micron closed Friday at $690.00, down 43.1% from its 52-week high of $1,213.56. It tumbled 22.0% over the week.
SanDisk ended down 64.2% from its 52-week high, its top price of the past year. Western Digital ended down 64.7%.
The business results point the other way. SanDisk said its revenue grew from the prior period and its net income rose sharply. Micron (Nasdaq: MU) reported higher revenue and wider profit margins. The fund's companies also raised their guidance, meaning their own forecasts for coming results.
The worry is the AI boom behind that demand. Ray Dalio and Ken Griffin are among investors who have warned the AI industry may be in a bubble. Some investors also fear rising memory production could outrun demand.
What could change the picture?
The companies are returning cash to shareholders. Micron announced a new buyback, meaning a company buying its own shares, starting in December. Samsung announced a buyback, and SanDisk repurchased shares in its latest reporting period.
The open question is whether buybacks and higher forecasts can outweigh fears about AI spending. The next broad checkpoint is the October Consumer Price Index, the monthly inflation report, on Nov. 10 at 8:30 a.m. ET. It shapes expectations for the Federal Reserve's next rate decision.
For readers
What it could mean for you: If you own a technology or semiconductor fund, memory makers like Micron can move it far more than a broad index fund. A fund focused only on memory chips carries those swings with little to offset them. Micron makes up 0.90% of the value of the 500 largest U.S. companies, a small slice of a total-market fund. If AI bubble or oversupply fears ease, memory-heavy funds could recover ground. If those fears deepen, the outflows might continue.
Questions and answers
Why is the Roundhill Memory ETF falling?
Its holdings, memory chip makers such as Micron and SanDisk, have dropped far from their highs. Investors worry the AI industry may be in a bubble and that rising memory production could lead to oversupply.
Did Micron and SanDisk report weak results?
No. SanDisk said its revenue and net income grew, and Micron reported higher revenue and wider profit margins. The fund's companies also raised their guidance.
What is a stock buyback?
A buyback is a company purchasing its own shares, which leaves each remaining share a slightly bigger slice of the company. Micron announced a new buyback starting in December, and Samsung announced one too.
The numbers
| Micron Technology (MU) price | $690.00 |
|---|---|
| Micron Technology (MU) change | +5.12% |
| Micron Technology (MU) market value | $780 billion |
| Micron Technology (MU) 52-week high | $1,213.56 |
| Western Digital (WDC) price | $263.78 |
| Western Digital (WDC) change | −1.44% |
| Western Digital (WDC) market value | $99 billion |
| Western Digital (WDC) 52-week high | $746.23 |
| Roundhill Memory ETF (DRAM) price | $39.29 |
| Roundhill Memory ETF (DRAM) change | +6.16% |
| S&P 500 change | +0.31% |
| 10-year Treasury yield | 4.86% |
Week ended Friday
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Not investment advice.
