The Memory Supercycle Is Back in Motion — and Samsung and SK Hynix May Be the Stocks With the Most Torque

Quick Read

• Micron (MU) has surged 565% in a year as the go-to memory chip play for AI data center builds, but investors may want to diversify into SK Hynix and Samsung, with SK Hynix commanding 72% operating margins and dominance in high-bandwidth memory critical to AI infrastructure. The iShares MSCI South Korea ETF (EWY) offers convenient exposure to both SK Hynix and Samsung, which together comprise over 25% of the fund.

• AI data center demand continues to absorb massive supplies of DRAM and SSDs, extending the memory supercycle and making it difficult to time a peak in the sector despite already explosive gains.

• The analyst who called NVIDIA in 2010 just named his top 10 stocks and Micron Technology wasn’t one of them. Get them here FREE.

Memory chip makers used to be cyclical and risky to enter after explosive upside runs. But what if things are different this time around, with the AI revolution continuing to move forward while AI data center builds continue hogging up all the DRAM and SSDs? Indeed, the memory supercycle has continued to run higher, and while the shares of the top players in the space can’t run forever, it’s probably going to be really difficult to time a peak.

Micron (NASDAQ:MU) has been a go-to play for investors seeking convenient exposure to the boom in high-performance memory. Shares have gained an incredible 565% in the past year alone, and while further gains might be tougher to come by, I do think that the AI bulls might wish to consider diversifying into some of the other memory chip titans as well. There aren’t many of them, but the ones outside of the U.S. might be able to provide a bit more torque as a memory supercycle looks to unfold.

The memory boom might not be over quite yet, say many analysts

While Micron still has more than its fair share of bullish analysts, some of whom expect a move that could entail a nearly doubling of shares from current levels (can you believe the Street-high target is set at $1,000 per share after the explosive past-year run? Neither can I, but I get the bull case), I do think that the South Korean memory players in Samsung and SK Hynix can also bring a lot to the table.

The analyst who called NVIDIA in 2010 just named his top 10 stocks and Micron Technology wasn’t one of them. Get them here FREE.

Most notably, SK Hynix is arguably the king of high-bandwidth memory. It’s not only a force to be reckoned with, but its operating margins are enviable, currently standing at 72% as of the first quarter.

Now, Micron’s margins are also impressive, and with room to run, but in terms of leadership, I do see SK Hynix as a brilliant complement to the likes of a Micron, especially once the shares go live on the U.S. markets, possibly in the summer. As to whether trading in the U.S. exchange allows the relatively-cheap memory maker to enjoy a multiple re-rating remains to be seen.