Main obstacle in AI development drives DRAM ETF to new highs

Round Hill Memory ETF Hits Milestone

The Round Hill Memory ETF (DRAM) has reportedly achieved $9.8 billion in assets under management in just 43 days, marking the quickest growth rate for an ETF.

In a recent discussion on CNBC’s “ETF Edge,” Round Hill Investments’ CEO emphasized that the surge in interest is largely due to the limited companies producing high-bandwidth memory and DRAM chips, which are vital for the burgeoning AI landscape.

“Investors seem to be realizing that memory chips are one of the biggest hurdles in developing AI,” Dave Mazza noted on Monday. “There’s a significant mismatch between supply and demand for memory, contributing to the robust performance of stocks in this sector.”

Mazza also highlighted that only a handful of firms are involved in manufacturing high-bandwidth memory chips.

“Historically, this market has been cyclical—characterized by periods of highs and lows—largely because memory is ubiquitous, found in everything from smart TVs to phones and vehicles,” he remarked. “However, what has truly shifted is the demand generated by data center growth and AI advancements.”

Looking ahead, Mazza anticipates that the imbalance between supply and demand could persist until at least 2028, fueled by AI requirements and the expansion of data center hyperscalers.

Positive Reception

In a special statement to CNBC, Todd Rosenbluth from TMX VettaFi commented on the ETF’s quickly growing popularity, stating it’s regarded the hottest ETF since the Bitcoin craze. He expressed surprise at the rapid uptake of ETFs, noting that unlike the Bitcoin surge, the demand for memory stock ETFs hasn’t been artificially constrained. “Thematic ETFs are gaining popularity as they allow exposure to fast-paced companies,” he added.

Drew Pettit from Citi Research remains optimistic about the ETF’s future, suggesting that strong stock price momentum is being driven by positive earnings trends. “We’ve seen significant earnings adjustments this year both in the U.S. and globally,” he commented in the same interview with Mazza. “Even if there’s a massive increase in stock prices, it should remain reasonable.” Despite recent trading pressures, DRAM has seen an increase of over 80% since its launch.