Key insights
- The Roundhill Memory ETF (DRAM) has seen significant returns driven by the AI memory theme, with demand outstripping supply. Despite potential cyclical sensitivity and the question of whether the rally is already priced in, the article suggests it remains a long-term buy due to the ongoing AI infrastructure build-out. This concentrated ETF represents a high-demand sector with potential for continued growth, though short-term volatility is expected.
The Roundhill Memory ETF (DRAM 14.25%) is easily one of the most successful exchange-traded fund (ETF) launches in years. By capturing the relatively undervalued artificial intelligence (AI) memory theme before it took off, the fund has delivered a 191% return since its debut in early April. It now has more than $21 billion in assets.
The results are driven heavily by three stocks. Here they are with their year-to-date returns as of June 19:
These three stocks combined account for 72% of the portfolio. The fund has just 15 holdings overall.
The bullish case for the Roundhill Memory ETF is pretty straightforward. AI requires huge amounts of memory. Supply hasn't been able to keep up with demand, and that's driven prices significantly higher. Roundhill calls the AI memory theme a "secular growth story tied to the multi-decade build-out of AI infrastructure."
The biggest challenge is that memory space can be cyclically sensitive. Economic activity can cause big swings in the supply/demand curve. Plus, there's the big question of how much of the bull case has already been priced in, given that the Roundhill Memory ETF's price has nearly tripled in less than three months.
I believe this ETF is still a buy as a long-term investment. The AI build-out will take years, and more memory will be needed as infrastructure grows. It's a concentrated play so that short-term swings could be significant, but there's no question this is one of the highest-demand sectors of the economy today.