The Story Behind the Memory Stock Boom! (It's Not Over)

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2:31Expense reports, receipt chasing, month-end close that takes weeks. You become what you spend on, and that's not what you're building toward. Brex is the intelligent finance platform that eliminates that work before it starts. AI agents that handle the manual stuff automatically, so your team can spend their time on what actually compounds. It's time to get Brex AF. Learn more at brex.com slash AF. So let's talk about memory styles. But before we talk about memory, I want to show this video from Apple. Can we show this video from Apple? Wall Street Journal?

3:12Sound, please.

3:18No sound. No sound. No sound on the video. this is live

3:26yeah okay well I'll give context while that's trying to be loaded so it's interesting because Apple was in the news last week well it was in the news in the past couple weeks right like they had their conference and people were kind of underwhelmed by it which is rightfully so right when we talk about innovation and we were at it we still don't have the path for artificial intelligence laid out for us and then last week what we saw was they had made a partnership with intel why is that important well we know that the government obviously has made it a priority for intel to be in the business of manufacturing gpus cpus and tpus and so the apple proposition when i saw this is crazy the so the video which we're trying to get work i sent to shadi on on thursday yeah and he said it to me today so i'm like that sometimes that tells you number one i appreciate it because that tells me that he's looking at the the the memory space the way i'm seeing it but also says like we're on the right path because not only we see are we seeing it but ceos like tim cook ceos like jensen i know sanjay over at micron is seeing it the same way and so i sent him a picture of neo in the matrix i like to use neo in the matrix when everything starts to become true because you're seeing life differently and we're starting to see ai differently we're starting to see the layers it's not just hey it's nvidia and good luck with everything else it's no this needs to work in order for that to work in order for this to work and so the picture is becoming and very clear.

5:07And that's kind of what the video is. Hopefully we can get to go, Mike. Apple has a problem. It's so bad that Tim Cook is calling it a 100-year flood. The price for tiny but critical components buried inside our electronics is skyrocketing, specifically memory and storage chips. And Tim Cook told me it's going to force Apple to raise prices. I spoke with the outgoing Apple CEO in an exclusive interview about the company's plan to adjust to this new reality. Cook told me that the company's planned price increases are unavoidable. And while Apple has tried to mitigate increased costs, the situation, he said, has become unsustainable.

5:44So why is this happening now? Chips have gotten faster and cheaper every couple of years, powering a new technology revolution every decade or so. But in the last few months, that magic formula has reversed. That's because the prices for memory and storage chips, which are inside virtually every computing device, have suddenly skyrocketed. Apple's latest warning is remarkable, because it's been the biggest buyer of storage since the days of the iPod and also a giant buyer of memory. But now there's a new competitor in town, artificial intelligence. AI companies are flooding the memory and storage market with money and securing much of the supply.

6:19Suddenly, Apple no longer has the leverage to push the storage and memory makers for the lowest prices. It has to wait in line. What Cook told me on our call is that Apple has already been absorbing higher costs, but now it is swinging over to option two, price increases. Cook didn't say how much prices will increase, or when, or on what products. But to give you an idea of the scale, research firm Tech Insights says the cost of memory and storage inside last year's iPhone 17 Pro was$50. The cost for the same components in the upcoming iPhone 18 Pro, around$200. Now, the good news for Apple is that it's in a better position than less profitable companies who have little cushion to absorb the higher costs.

6:57Other companies are saying this is worse than tariffs, worse than the chip shortage during the pandemic. So this isn't just an Apple story. It's a tax on basically everything with memory and storage chips. And few consumers realize this wave is coming. So, all right, let's put that in perspective. If you watched that video and your key takeaway was that Apple is in trouble or it's not even about Apple. No. The video illustrates the need for memory, the supply demand crisis that has happened, and the price increase for the memory chips specifically, which is why Apple is raising their price. Apple is not really the most important part of that story.

7:48It's the memory. So that's why these memory stocks have skyrocketed, right? just kind of illustrates that, puts it in perspective. So when we talk about the memory stocks, and we'll talk about the memory stocks now, because that's the title that we're on right now. But when we talk about the memory stocks, we talk about memory ETF. We've been talking about DROM.

8:10So vitally important for you guys to understand that it's not over yet. So when I brought the Micron and then got ridiculed for that,

8:26he didn't understand that it wasn't like micron was just like some meme stock that just shot up for no reason yeah there is a real demand for these memory chips there's a shortage of them the price has increased higher so when you see a company like apple pretty much saying like we we gotta we gotta raise our iphone because there's no other there's no other option Well, that should tell you the future of the memory sector. It's not over yet, right? So let's talk about the individual, because I know you was early on talking about these stocks. So explain the memory sector, talk about the individual stocks, because we talk about these stocks and a lot of them have went up over a thousand percent this year, in the last 12 months.

9:15Like even Micron's up 888 % in the last 12 months, just the stock, not the option, just the stock. So, and then there's a bunch of other memories that's not directly memory related, but kind of spinoff memories. There's different like subsector memory adjacent. So, yeah. Ian, can I have a moment? I'm going to have like an Ian moment real quick right now. September of 2024, inside of EYLU. This is the first time, probably the second time, I break down this company called Micron. Why do I break it down? because I'm understanding this AI data centers specifically and the components that are going to be needed inside of it in order for it to function.

9:59In June of 2024, this is the first time I actually invest in a company. By December of 24, I'm saying the business model for Micron. Well, why am I saying the business model? Because it changed. And I told you, anytime you look at companies that start changing their business model to gain profit, that's an interesting proposition. What was the business model prior? They were making memory for CPUs. Well, that had been something that was done from a generation past, which is why a company like Apple can dictate, hey, we're not paying that price. Because when you're making it for the CPU and there's no other component that's needed, then that becomes cyclical.

10:32And we've been saying all along, this is not a cyclical situation, right? This is something that's going to be here for a while. And so part of that thesis was, okay, well, Micron isn't the only one. Western Digital at the time, this is again, September, 2024. Western Digital is prominent. Seagate, ticker STX, prominent. Sandisk is not even a company yet. Think about that, right? September of 2020, Sandisk is not even a company. It's still a part of the Western Digital conglomerate. It breaks off in February of 2025. What are we seeing? We're seeing the demand for AI increase the memory demand.

11:10Why? Because in order for the heart, right? We did this diagram. The heart of this AI revolution, we can say, is the GPU and the leader of the GPU is NVIDIA. Now, TPUs have been created, of course. We've seen Google do that, XPUs with Burecom. We've seen that. But at the heart, those processing units are there. In order for them to function at the highest capability, they need a brain. The brain of the operation is its memory. Now, all memories are not created equal, right? Which is kind of what you were just alluding to, Shadi. We're talking about DRAM, which is the ETF name, right? And we'll get into SK Hynix and Samsung in a bit.

11:47but that is what is used for large language models, right? That is what's used for inference, which is in the highest demand. And so we're starting to see those numbers go up. Now, what has happened is that they control the supply-demand equation, right? The supply has increased, right? The supply has increased. The demand has increased. Well, that has switched over the past eight months. The demand is so high that they are not meeting supply Because they've sold out for 2026. Who was sold out? SK Hynix, which is the world leader and just became the largest company in South Korea's history. Samsung, which is number two.

12:26Micron. When we talked about American companies that are going to dominate, why do we say Micron? Because it's the leader of American memory DROM. Plain and simple. In that time, that sells out. So we have to go to the next venture. Well, if we have DROM taken care of, can we get solid state memory, right? So solid state disk, that's the USB that you used to use. That's the cards that go inside of a lot of your devices. A company like Sand is spun off from Western Digital. That company has gone up by 4 ,000%. Not an option. The company has gone up 4 ,000 % since February of 2025. These companies are not going anywhere because the demand for memory will not go anywhere.

13:11In fact, when you use your chat GBT, I said this the other day to one of the players. I said, do you use ChatGBT? He said, yeah. I said, how often? He said, all day. I said, perfect. You're one person. Think about how many times you prompt and how much memory is needed to keep that prompt in conjunction with what you're trying to ask it. I said, now you're one person. You know how many people OpenAI has on a monthly user base? One billion. Yeah. They have one billion users, and that's just OpenAI. How many does Anthropic have? How many does Gemini have? How many does XAI have? Think about all those people that are prompting at the same time and how much memory is needed.

13:49That's just on the large language models. That's not even including the type of money that's going to be spent inside of these data centers. And so when you look at that, I always say the same quote. I text him all the time. We're not done. What's that mean? We're not done. Right? Stay local. Fine means, look, we're going to be in here. We're going to be precise when we execute. But this story is far from finished. Why is this story so interesting? because when I see Intel saying that they're going to make more manufacturing GPUs and TPUs for Apple, I say more chips, more memory, right? So it's no coincidence that when we watch Micron run up today to its all-time high, we watch this run up to its all-time high, these things are happening because the demand for the key component inside the story is still going to be here.

14:38The more AI we have, the more large language models we have, the more agentic, the more robotics we have, They're going to need that brain component. And that's why you're going to continue to see these things run. Now, drama is important because it has an ETF. We talk a lot about ownership. And one of the most important assets you can own is your digital real estate. Too many entrepreneurs rely on social media platforms they don't control. Your website should be the center of your business. Framer helps you build a professional website without all the friction. It's more than a website builder.

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18:27Well, we get access to it. So I know some of these companies have run high. In fact, there might be a split at some point in the near future. So Drom gives us access to it. 27 % of their allocation is Micron. I love that. 26 % of it is SK Hynix, a company that we can't trade it because it's in South Korea, but it will IPO in America sometime in the fall. Perfect. Samsung is number three. And if you look at the allocations, there goes Western Digital, there goes Seagate, there goes Sanders. These are all prominent stories that I wouldn't say we're in the first inning, but we're definitely not in the ninth.

18:59There's so much room to go. And so this is why when you see memory and you keep hearing memory and you don't know why it's moving, this is why it's moving. And shout out to Edwin who sent me this. he's uh remember when there was a memory shortage in 2020 like this is going to be a multi-decade story right it went from nvidia amd and now it's the trade and investment has kind of evolved and the great part is when there was a bunch of uh specs and memes floating around i've always said the great enterprise companies are going to push back and they're going to take the reins and They actually have done that a ton.

19:37And so much so that they've moved meta out of the top 10 in terms of market cap. So for anyone who thinks that this trade is going to be short-lived or this investment cycle is going to be short-lived, because I know there's a lot of people putting that SOXL chart versus the 1999 chart versus now. I keep saying the difference between the companies then and now is that these companies alone print the GDP of nations. in 1999 and 2000, they did not. They're needed. Has Apple under-delivered on the Siri AI? And yes. But I think the partnership, even though it's a force and arranged marriage from Trump, I think that's going to give them a little bit of a chance in to finally build some AI infrastructure that they need.

20:25But for anyone who keeps asking, is this going to go away? It's not going away anytime soon. It's not going anywhere anytime soon. You know, when we talk about relationships, think about where Apple was in terms of relationships when it came to memory. I mean, dominant, the number one customer. They were TSM's number one customer. They are no longer TSM's number one customer. NVIDIA is now past them. When you talk about the idea of being the first in line and saying we're not paying to now being maybe fifth in line and saying you're going to pay the price or you won't have it. or you won't have access to your leverage is gone and that's a great lesson you have to make sure you keep pole position when you have the leverage apple got so comfortable and that's why i kept pushing back tim needs to leave you have a small and finite window to be the king of that market cap and you missed it and now meta slowly and at least the meta has tried to build out an accurate AI infrastructure and spend for what they need.

21:27But even as so, they went down to 10th. Thank God BYD is not available in the United States. We will be having a different conversation about the top 10 market cap there as well. But this memory trade is not going anywhere anytime soon. Well, let's talk about, okay, staying on a memory. Wednesday is MU Micron reports. so what's been happening and that's why actually I brought that Micron call last time because it dropped pretty sharply so it's been a common theme with a lot of tech stocks lately is that regardless of what they report they be earnings, they don't be earnings, stock drops so Micron being one of the leaders when it comes to probably the leader, trillion dollar company when it comes to memory they report on Wednesday so what we looking forward to when Micron reports on Wednesday?

22:28I think people need to anticipate something stupendous. It's going to be monumentous in the words of my boy Carlos Miller. It's going to be monumentous. Now, is great great enough? I mean, I don't move here. Think about this, right? When we talk about EPS earnings per share, the expectation. Ian, if I asked you, hey, if a company says they're going to grow by$1.25 in a quarter, you say what? I am elated. You're elated, right? Job well done. Spectacular performance. This is MVP Bronson-esque numbers. The EPS for Micron, when they report on Wednesday, is $21. Okay, basketball terms, that's like expecting someone to score like 92 points in a game.

23:23the expectation is so like bro what are we doing so let's say let's say that they they maybe they miss buys like and it's 20 per year yep you're talking about a company that a year ago was moving at that pace of a dollar 47 eps dollar 70 eps last quarter it went up to eight dollars EPS. This quarter, they're expecting 21. And if you look at future guidance for the next three quarters, we talk a lot about ownership. And one of the most important assets you can own is your digital real estate. Too many entrepreneurs rely on social media platforms they don't control. Your website should be the center of your business.

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24:44Learn how you can get more out of your site from Framer specialists or get started building for free at framer.com slash earn for 30 % off a Framer Pro annual plan. That's framer.com slash earn for 30 % off. Framer.com slash earn. Rules and restrictions may apply. If your best finance people are doing expense reports, chasing receipts, or spending time on month-end close, it's time to get Brex AF, a gentic finance that eliminates that work before it starts. Learn more at brex.com slash AF. Every business has an ambition. PayPal Open is the platform designed to help you grow into yours. With access to business loans so you can expand and hundreds of millions of PayPal customers worldwide.

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