By Paul R. La Monica
The market's appetite for memory chip makers is feverish, but this subset of the semiconductor industry might be looking a bit too hot.
The Roundhill Memory exchange-traded fund has nearly doubled its returns since its early April launch, and already attracted nearly $10 billion in assets. Investors need to be very careful.
Memory companies have been the latest beneficiaries of the artificial-intelligence investing craze, a boom that has lifted the entire semiconductor sector. Two broader chip funds, the iShares Semiconductor ETF and VanEck Semiconductor ETF, are also getting a sizable boost. Each has surged about 30% in just the past month. Both ETFs are based on indexes and passively managed.
But Roundhill's actively managed ETF -- which trades with the ticker symbol of DRAM -- is beating these other semiconductor stock funds. The reason is its focus on memory chips and its heavy concentration on three companies in particular: Micron Technology, and South Korea's SK Hynix and Samsung Electronics. These three holdings account for three-quarters of the fund's net assets.
Memory darlings Sandisk, Seagate Technology Holdings, and Western Digital are also top holdings, making up 13% of the fund's assets. And Japan's Kioxia, which just announced plans to list shares in the U.S., makes up nearly another 6%. Combined, these seven companies are almost the entire portfolio.
Dave Mazza, CEO of Roundhill Investments, told Barron's that this was a conscious decision and mirrors the concentrated nature of the memory chip market.
"DRAM was built to provide investors pure-play exposure to that market, not a diluted version of it," he said in an email. "The 75% weight in Micron, Samsung, and SK Hynix reflects the reality of the industry."
"That concentration is exactly what investors have been looking for," Mazza added.
He does have a point. The iShares and VanEck chip ETFs don't own shares of Samsung and SK Hynix, which primarily trade in South Korea. SK Hynix is reportedly looking to list in the U.S. via American depositary receipts (ADRs) though.
But is it too late for investors who may have been sitting on the sidelines to chase the DRAM ETF now? The fund tumbled more than 5% Friday, after sliding more than 1% Thursday. And on a technical basis, it might be time for a further pullback after the ETF's impressive six-week run.
"The fund may finally be showing signs of exhaustion," Barron's senior technical analyst Doug Busch says, noting the fund's relative strength index $(RSI)$, a measure of price volatility, is now near an elevated level of 90. The technicals paint a similar picture for the individual stocks of Micron, SK Hynix, and Samsung.
Vance Howard, CEO and portfolio manager with Howard Capital Management, agrees. He said investors have to be cautious about buying the memory leaders and other chip stocks at these levels.
"Semis are way overbought to the point that this is getting scary," Howard said. "This is unsustainable."
More evidence that it might be getting scary? Even though the Roundhill fund is less than two months old, Themes ETF Trust, another ETF company, has already filed with the Securities and Exchange Commission to launch the Leverage Shares 2X Long Memory Daily ETF, which would use options to magnify the daily performance of DRAM.
The excitement about what's next for memory stocks is palpable, but some investors question whether it's sustainable.
"We expect some of the hottest segments to lose momentum. Semiconductors as a group are showing signs of some bubbly behavior," said Jimmy Chang, chief investment officer with the Rockefeller Global Family Office. He told Barron's that investors should "harvest some of their winnings...especially in segments that have done so well where the charts look parabolic."
But there is an encouraging sign. Individual investors appear to be flocking to memory stocks and other chip companies because they believe in the long-term potential for AI. That suggests any steep slide in these sectors might not be a permanent one, and investors will jump back in when the price is right.
Anthony Denier, group president and U.S. CEO of the brokerage firm Webull, said retail investors are continuing to buy memory chip makers and other chip stocks with exposure to the AI infrastructure buildout.
"The level of participation we're seeing suggests investors increasingly view semiconductors as a long-term structural theme rather than a short-term trade."
But memory chip stocks haven't been tested lately, with no sustained major pullback in the past year. So it remains to be seen whether investors in Micron and the new DRAM ETF will buy any dips if a significant slide is looming -- as the technicals suggest -- or if they'll head for the exits.
Write to Paul R. La Monica at paul.lamonica@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 15, 2026 12:44 ET (16:44 GMT)
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