Investors pursuing AI riches keep chasing the chokepoint. First they backed the models themselves (OpenAI), then the chips and compute (Nvidia, CoreWeave) that power them, then the dirt and steel that house them (data center stocks). The “picks and shovels” approach to investing then turned sleepy utilities into AI plays, and metal prices soared.
Now, the money is chasing humble memory. The least glamorous input in the entire stack is so scarce that Apple — a company with enough supply-chain muscle to make its vendors eat the cost of almost anything — just raised prices on iPads and MacBooks. (iPhones were spared for now, but Tim Cook says that won’t last.)
The next test of this trade is the US listing of SK Hynix, South Korea’s second-largest memory chip maker, which aims to raise $28 billion. Its Korean-listed shares have more than tripled this year, tracking a hockey-stick rise in the stock price of Micron, the only big American memory chip manufacturer.
But the trade may be turning. Micron is down 15% from its peak last month, and Samsung dropped 11% after lofty earnings failed to meet loftier expectations. “This is right on schedule for a reset,” Morgan Stanley’s chief investment officer, Mike Wilson, told Semafor, of the chokepoint trade. “That momentum always reaches a point where it kind of exhausts itself, and that’s where we are today.”