Bracing for AI Memory Earnings: STX, WDC & SNDK on Deck

tomorrow. Western digital and SanDisk reporting on August 5th. Now time for our 360 round. Let's bring in our panel to discuss the state of the memory trade. Joining us, Bob Lang, chief options analyst and founder of Explosive Options, and Matt Bryson, managing director, semiconductor and hardware research at Wedbush Securities. Matt, let's start with you. And we've got a big week for earnings. We've got Seagate and Kayla, as I just mentioned, SK Hynix also coming out. What are these reports going to tell us about the health of the AI trade. I think they're going to tell you that memory is is really healthy. The the issue though for all the component vendors recently hasn't been their results. Right. You saw Taiwan semi tell you that their revenues re accelerating and the stock still went down. So the problem is these vendors aren't going to tell you about concerns around can hyperscale. The effectively make enough money to continue to fund future spend. Which I think is what concerns are rather than going to tell you that that things are really, really good right now. So, Bob, if we get reports that say things are really, really good right now, what are you expecting to see in the reaction? Because the expectation for the numbers is pretty set. It's the reaction that's up for debate. That's right. That's right, Marley. And it's the reaction is probably not going to be very good, even if the numbers are very strong. And even if the guidance is strong, I. Far as the technicals are concerned, Marley. The the charts are in solid downtrend right now. Lower highs and lower lows. There's our textbook pattern of a downtrend. And I don't see very much levels of of support here for at least a considerable down move for a lot of these stocks not just Seagate but also Western Digital SanDisk and and micron. You know, we we do have some more supply coming online. I don't mean in terms of memory and Dram, but I do mean in terms of stocks. We we saw SK Hynix came out. We also saw a new name coming out today, which is see, see the next. And that's a China name that is going to probably provide some nice competition for micron. And then also some of the other memory and storage companies as well too. So there's been some talk as well that Apple is going outside of the United States and trying to secure some memory from some lower cost suppliers, and especially in China. And if that happens, then we're going to see some some price pricing prices coming down for some of these memory names. And Matt, we've seen Seagate become one of the biggest winners here of the AI boom. Some would argue a surprising winner even I've had. That said, why are hard drives suddenly becoming such an important part of the AI infrastructure story? I mean, as I'm looking at the chart, they're up 425% in the last 52 weeks, and that's including a 6% plus move to the downside today. Yeah, it comes down to you need data to support AI, right? All these models are are trained on data. So data is more important. At the same time with hard drives, the same way we have the situation memory where there just isn't enough supply because people weren't planning for this. There just isn't enough supply for hard drives. And there's a semiconductor element there to to build out the fabs is 2 to 3 years. And so even if there's more demand, these vendors just can't respond real quickly. And Bob, we're going to hear from a swath of names here in the next couple of weeks. If you were only given one name to choose that, you had to bet the farm on, who do you see as having the most potential upside? Well, in this in this group, Marley, I would say lam research Lrcx is probably the the the best name. I'm not going to say it's a safe name because it's certainly moves with the whole group. ASM lithography is getting hammered today on, on Monday also kla-tencor, which when we talked about is also getting hit hard. But I think Lam research is very well diversified there in this space. And I think that even though it's getting hit today, it probably has the most upside potential. It was recently up at $400. It's down about 30% from where that level was. And I think their margins are real strong. And certainly the last couple of quarters, they've come out with some good earnings and good guidance. And I think you're going to do that again. And oftentimes when we see the stock come falling down like it has last couple of weeks, the company will come out with a massive buyback. And I think that that's going to be on schedule later on this week. All right. Well get KLA and Seagate tomorrow after the close and then we'll have Lam research following on Wednesday along with some other big names there. But rea