The Memory Market Standoff

Hey guys, welcome back. Hope you are doing well. I'm still a little under the weather. You can probably hear it in my voice today. So, I apologize for the raspy voice for this video, but I wanted to get out my thoughts because if you're looking at your portfolio, as mine is, you're seeing a deep sea of crimson red across the board. Most of the stocks that I own or that I track were all down today. The memory titans were down. No matter if you look at the memory memory players, the connectivity players, the compute players, they all face significant pressure today. I actually look at today and the theme I thought of is liquidity versus fundamentals. We saw selling pressure across the board, but it's what we predicted when we were looking at the pre-market last night. We saw significant pressure in the Asian markets and we know that that momentum tends to carry across the Pacific and it impacts the US market. It's what we saw at the opening bell today. I mentioned it last night. I thought we would gap down and it could be a violent gap down today. That's exactly what we saw. But that gap down was sustained throughout the entire trading action and not just isolated to the memory sector. It was down across many of the stocks overall. I want to show you exactly what that looks like. When we pull up the NASDAQ 100, you can see the red across the board. No matter what, if you're looking at compute, if you're looking at Nvidia, Broadcom, Micron, AMD, if you're looking at over the semiconductor, the picks and the shovels were down today. The other members of the Fab 4 were down today. When you look at Sandis down over 12 and a half%. Seagate and Western Digital down about 5%. Micron was down just over 4.3%. But it was a day where we saw significant amount of stock that we follow on this channel just face selling pressure. There was a number of reasons for it and we'll get into it in this video, but to the untrained eye today potentially could look absolutely like the bursting of the AI infrastructure bubble. We saw mainstream media, those headlines already take off and talk about a cyclical peak and the retail investors right now, no doubt about it, are panicking. But if you know how to read institutional market mechanics, you know that today's action reveals something completely different. What we're not witnessing tonight is a fundamental failure. It is a massive temporary valuation standoff and liquidity shuffle. It's basically what I said earlier. This in my opinion is liquidity versus the fundamentals. That is the battle that we're seeing in the marketplace right now. And guys, my conviction hasn't wavered at all. The fundamentals for this memory sector that we track each and every day on this channel remain rock solid. They've remain ironclad. And we're going to go through some stories that demonstrate that today as we look at how these stocks performed today. What are they doing in the after hours right now? We're going to look at the performance of these stocks and then I'm going to pull up three stories that I think should give you further conviction in this sector overall. But let's get into it. But if you haven't done it already, make sure you hit like, make sure you subscribe to the channel. All right, guys. Let's start off by taking a look at Micron and the other memory players just to see how they traded today. You can see right here, Micro is down by $42 today 4.32% as I mentioned earlier. But if you look at the after hours right now, you might say it's still bleeding red, but guys, I've been tracking this for the last hour since the market closed, quite honestly, and it's actually improving. It's improving within the last hour. We're closing right now on only $3.50. That has gotten significantly better, probably in the last 30 minutes. My prediction is by the end of this video or at least I would say another hour or so I I I anticipate that to be in the green for Micron and we're seeing that same trend across the other players as well. If you take a look at SanDisk, it's already reversed. SanDisk is in the green. Now, if you were tracking this earlier, you know, the after hours for SanDisk was not green. It was in the red. We're up by $8 right now, but SanDisk had the toughest day across the group today. But it's not surprising. They're the highest beta within the group. They swing the highest from the lows and the highs down by $241 today, 12.63%. But there's so many bullish articles right now for saying this in the marketplace. I can't go through them all in today's video, but I will put out future videos this week just highlighting some of the strong data and why you should have conviction for SanDisk moving forward. But right now, they have definitely suffered the most today. They had the most selling pressure. If you look at Western Digital, closed at 555, just over 555 today, down by about four and a half%, $27. Again, the after hours is starting to lift. We're starting to move from red into green with all of these stocks. My prediction here is Western Digital will also flip into the green like we saw with SanDisk. And then finally with Seagate, we see Seagate also flipped into the green in the after hours, but today it was down by about five and a half percent just about $50 overall. Closed at 860, just over 860. And in the after hours right now, we're up $3 trading close to$8.64 right now. So we flipped into the flipped back into the green overall. Let's see before I leave. Where are we with Micron right now? Getting better and better. Look, it's 21 right now. I think as I mentioned by the end of this video I predict that Micron will be back into the green. We'll see what it does at tomorrow's opening bell but right now question 938 was the level was that institutional line in the sand that I mentioned that I thought we would defend today. We got a little below that at 937 but clearly if you look at the candle pattern chart here you see that significant gap down that I talked about. Let me get rid of these boxes. that gap down. We ended right here and we shot right down here on Monday. Gapped down, fought back a little bit, but then just had just sideways digestion throughout the day with a little bit of promise towards the end here. A little bit of left lift up here probably in that last 30 40 minutes before market closed. You can see the volume dynamics over there as well. So, let's keep our eye on that piece. Let's see if Micron has the ability to flip before we even end this video. But I want to jump into some stories just to cover uh why I have conviction or continue to have conviction some signals in the marketplace right now. So let me pull up this first one from Digi Times. Here you can see AI demand lifts the entire Taiwan semiconductor supply chain in June. Memory revenue nearly quadruples as I mentioned. So, if I scroll down, they tracked all 13 tracked subsectors of Taiwan semiconductor supply chain recorded positive year-over-year revenue growth in June of this year. Memory led all categories by a wide margin with revenue up by 288% year-over-year, reflecting continued AI and high bandwidth memory driven demand. Though the scale of the the increase is partly amplified by weak base year they mentioned. But if you just look at the the table here you can see in all 13 of these subsectors that were tracked memory is significantly outperforming all of the other sub subsectors overall. As I mentioned revenue memory revenue skyrocketed by a massive 288%. So even when adjusting for a weak historical base year, as the article said, this nearly quadruples revenue and it proves that actual physical consumption of high bandwidth memory and advanced storage isn't just steady, it is accelerating right now. And that exponential demand is backed by direct commentary from the absolute top of the food chain, which is the SK group chairman. Let me pull up that article. We can go through it together. But you can see here SK SKH Heinik chair dismisses HBM slowdown talk reportedly says client wants memory capacity up five or 6x. Let's go through some of the details in here. But we can right here you can see notably in recent interviews with foreign media skinex highlighted the looming memory supply crunch. It is it's expected to peak next year in 2027. They also revealed further details details of its US expansion strategy and here are the takeaways. So first off as I mentioned reports from their chairman the reports that customers are urging SKH to boost supply five to six times what they have today. The remarks underscore the widening gap between surging AIdriven demand and available memory capacity. Even as the company plans to aggressively expand production, we're seeing right here that SK they aim they aim to triple wafer output by 2034. They scroll down, they say global memory industry is headed towards its most severe supply shortage ever that they've ever seen next year in 2027. Also, SKH Highix expects demand to remain above its supply capabilities even beyond 2030. But the company is continuing efforts to narrow that gap. And despite rising despite despite concerns that rising HBM costs and supply constraints could prompt tech giants like Nvidia and Google to reduce HBM adoption, SKHix push back against that narrative. What they cite is reports that the company has seen no signs of weakening demand from major comp for major customers. Is a great sign for us memory investors. When you see a powerhouse like SKH say and they push back on that narrative and saying we are seeing no signs of weakening from their big customers from the hyperscalers that is such a positive sign for us as investors in this sector. It's something we have to keep our ears open to in two weeks when all the hyperscalers report their earnings. But this is a great bullish signal from SKH Heinix. And they go on to further say, "We haven't seen any signals that HBM demand is declining," adding that our partners are actually asking us to further increase supply capacity for both this year and next. I also wanted to go through one more piece in here because we just saw that you know SKH Heinix they're saying that the the CEO issued this extraordinary warning to the market stating that the global memory industry is pacing towards its most severe uh supply shortage in the history that we've seen next year with demand fund fundamentally projected to outstrip total glo global supply capabilities well beyond 2030. That's such a huge signal for us as investors. That is a that's what we call just a massive signal in the market. The physical factories, they just cannot simply build clean rooms fast enough to meet the compute requirements of the AI area of the AI era. The red tape that you're seeing today, that is paper volatility. The physical world is completely starved of silicon. That should give you such faith as an investor in this sector overall. But here's the question I want to ask and I think when we go through these these stories we see such strong conviction overall in the sector. So you have to ask the question is why are we seeing red today? Why are we seeing performance just start to stall overall in the sector? And I want to share a few thoughts on my mind. It may help ease some anxiety and the concerns you have today as well because today's selloff wasn't triggered by an AI slowdown. It was triggered by a perfect storm of structural market plumbing and technical crowding. Institutional money isn't questioning the demand today. It repricing risk and that distinction matters. We're seeing right now as I mentioned last night this clear this what this clear arbitrage that was created by the SK SKH ADR. You know the recent launch it has triggered this immediate liquidity shuffle that we're seeing in the market. Large institutions are actively rebalancing their tech portfolios. They're selling off US names like Micron and SanDisk to free up capital and capture arbitrage arbitrage opportunities overseas. We also have to be honest. We we know that this is a heavily crowded trade. It's been that way probably for the last 12 months, even more. This sector has become incredibly crowded with investors. And when a sector gets this tightly packed, institutional algorithms use any minor macro catalyst to execute sharp profit taking and to flush out latestage momentum buyers. And then finally, it's the macro kind of headwinds that we see. We tal I talked about it a little bit last night, but the macro tape today was further pressured by rising oil scares and broader geopolitical anxieties. And it triggered automated systematic selling across high beta tech names like Micron, like SanDisk. But this is a technical shakeout, not a fundamental breakdown. And if we look five down years down the road, we can actually probably see the road map and where it's heading because right now we saw a story that came out from Apple that also gave me strong conviction. Apple's kind of top secret silicon road map was uh shared earlier today and I want to pull that up. It was shared in on Tom's hardware. So, let's walk through that together and just to see what it means for the memory sector overall. But you can see the headline. Apple's rumored M7 Ultra targets 1.5 terabytes of memory and Blackwell class AI performance. Reports claims a monster 2028 offering would depend on memory shortage easing. So, let's go through some of those stories right here. Apple plans their M7 Ultra chip. It's being designed to support up to 1.5 terabytes of unified memory and to push AI performance towards the class of Nvidia Blackwell accelerators. But whether the lawfully top memory configuration can ship at all will depend on the state of the memory market. And that part isn't expected until 2028. I think I screw highlighted one other piece right here. The one the 1.5 terabyte target for the M7 Ultra is roughly twice the capacity Apple has planned for the M5 Ultra. But here's the thing. The 1.5 terabyte would call for far for far more of the same scarce highcost memory because it said Apple already pulled the 128 gig gigabyte Mac Studio this year over supply constraints as DRAM prices climbed. So this is their goal, but will they be able to ship it is all based on how the market, the memory shortage in the market and will those prices ease overall for Apple. Big plan, big massive bullish plan for Apple, but will they be able to execute it? This is a double-edged sword here because reports explicitly note that the the reports explicitly note that whether Apple can ship its 1.5 TBTE monster depends entirely on the current memory shortage and that easing in the marketplace. A 1.5 TBTE configuration requires an astronomical amount of premium silicon. For the bears, this proves that the extreme pricing and supply deficits could delay major consumer hardware rollout. For the Bulls, like most of us on the channel, it proves that the world's most valuable consumer hardware company in Apple, it is designing its entire multi-year silicon future around a massive, insatiable consumption of memory bits. That is a huge signal for us as well. It's a great signal for the sector on what Apple plans to do with its future products. So, in closing, guys, when the in the international memory pip pipeline prints a 228 year-over-year revenue explosion like we saw in Taiwan today, and when Apple's redesigning its silicon future around terabyte scale unified memory, and when top manufacturers like SKH are explicitly stating that they are sold out, you are being handed an incredible databack structural discount in the market right now. Do not let short-term plumbing dictate your long-term wealth. Personally, I view this technical bare market as an opportunity to prudently allocate capital where the physical scarcity resides in the marketplace. Now, those companies that are solving the bottleneck, just remember this. Wall Street trades liquidity. Manufacturers build capacity. Those two clocks move at completely different speeds. Liquidity can disappear in a single trading session. Capacity shortages take years to solve. If you understand which clock matters for your investment horizon, you'll stop confusing volatility with value. That's the real signal hidden beneath today's tape. That's the signal that's hidden beneath the action that we're seeing right now in the memory sector. So, make sure you smash that subscribe button. Make sure you drop your comments below, guys, and I'll see you in the next one. Take