AI Hardware and Memory Chip Rally (with Lizzy Burden)

European tech stocks are among the biggest gainers, continuing a global rally in chipmakers after SK Hynix and Micron surpassed the trillion dollar mark. Geopolitics has been muted, giving an excuse to focus on tech.

Lizzy Burden

Neil Campling

AI has become a new macro trade. The hyperscalers' investments are driving the data center buildout, now focused on memory. Memory stocks are cyclical—SK Hynix had negative gross margins in 2023 but is expected to have 80% gross margins and $130B net income this year.

ASML acts as a monopoly for chip-making equipment. While SK Hynix is up over 1000% in 12 months, ASML is only up 100%. ASML has remained cash positive and gross margin positive throughout cycles, unlike memory companies.

Is it a worry that single stocks are so dominant?

Lizzy Burden

Neil Campling

ASML owns the IP for its machinery—China remains 2-3 generations behind. ASML has a diversified customer base (Intel, TSMC) beyond just memory. The DRAM spot price has risen 600% since August, which is inflationary and creates ripple effects—consumers will pay the price for supply shortages.

Lenovo raised guidance last week, showing the impact on AI hyperscalers consuming memory chips, forcing other providers to pay higher prices.

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