Thematic Investment Research on the AI Buildout
Not Financial Advice
Joined December 2024
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Never seen this much stupidity in the market around a theme as I'm seeing with the memory names.
How can you not be attracted to the insane cash flow these companies will generate over the next several quarters?
They won't sit quiet while the street calls them commodity businesses. And oversupply won't play out like previous cycles, no matter how much you cry.
1. HBM eats a big share of wafer capacity itself, and bringing new capacity online for a structural shift in demand is hard and slow.
2. They learned their lesson. Last time buyers got cheap memory and gave little in return, which hurt the suppliers while buyers were all smiles. Cough cough, $AAPL.
I also see these companies diversifying across the semiconductor supply chain. Samsung already has, and Micron and SK Hynix likely follow.
The cash they'll have makes it very possible. It takes time, but the street is forward looking, so any news on that and they trade at 25-30x PE in no time.
@sama, blame our boy Timmy Cook for the name change ✌️
The street is completely wrong about how it looks at memory companies today.
I think I figured out the reason the next bull run comes for these names, and it’s not what most people think.
Many investors look at Micron, SK Hynix and Samsung as memory companies. That’s why their multiples are so compressed and why they get tagged as commodity or cyclical. But that view is wrong, because it isn’t considering certain important shifts.
In the latest quarter, the big three made $169B in operating profit combined. Take Broadcom, ASML, Applied Materials, AMD and Intel together and you get to $29B. That’s more than 5x what five of the biggest chip companies made. On free cash flow, Micron did $33B in a single quarter, more than double Broadcom’s best quarter ever. And this doesn’t stop in 2026, especially with the long-term deals they’re signing that run through 2030.
Now think about what that cash does. Hock Tan just said the next big bottleneck of the AI buildout is capital, not chips or memory. Guess who is getting insane amounts of cash every quarter?
These companies can reward investors through dividends and buybacks, they can go after acquisitions, and they can push into the rest of the semiconductor stack, from packaging to logic to foundry. Maybe they even go further into the software layer with their own cloud. Who knows.
The push into the rest of the stack is the point I need you all to pay attention to most.
Samsung already has all of it, with foundry, logic, packaging and devices under one roof. Hynix and Micron seem to be moving that way. Micron is sitting on $73B in cash and returned only about 2% of its free cash flow last year.
So this is the main point I want you to take from this post. Stop looking at these as memory companies. Because of how they’re redefining the memory structure, they’re building incredible moats. But it’s not just that. You need to start looking at them as full-stack semiconductor companies. Once you shift that perspective, everything makes sense. The moat protects their pricing power and margins, the cash funds the next expansion, and the next expansion widens the moat again. That’s how you get to $2T and $3T valuations.
And the product itself keeps changing. Memory is going custom. With HBM4 the base die moved to a logic process, so customer IP now lives inside the memory stack. Every stack gets designed together with the chip. Then you have HBM4E, HBM5, and further out Samsung’s zHBM, which stacks memory right on top of the accelerator. High bandwidth flash and even new DRAM architectures are coming. Every new rack needs more bandwidth, and HBM takes way more wafers, so supply stays tight and margins hold.
Then there’s demand on the application level. We’re not talking about one agent anymore. We’re talking about thousands of agents working at once, and every one of them carries its own context, which all lives in memory. Software is getting personalized on the spot, with AI generating the code or the visual you want right there, something Zuckerberg talked about recently. Enterprise, consumer, software, everything is getting tied to AI. I don’t see the exponential rate of increase in token consumption going down anytime soon.
The street many times comes late to understanding the bigger vision companies are working toward. By the time it gets it, the stock has already priced it in. This feels like the time to buy heavy. NFA.
even at $5, I'm not buying $IREN
portfolio destroyer, this one
BREAKING NEWS🚨: According to @theinformation, Microsoft's $5B less in capex in Q3 than it had planned was in part due to delays by $IREN.
We would not be surprised by this, considering that IREN continues to come up in our conversations with neocloud customers, usually for the wrong reasons. Multi-day power outages, network upgrades, storage failures, air quality controls leading to link flaps, XIDs everywhere. The #1 worst site in the industry, according to users.
unfortunately, or fortunately, it never is the end...
tomorrow we get back up and we fight to live another day
there's so much to life than just charts, numbers and stocks
stick to your roots, values and remember what you are here for
make long-term wealth by investing in the AI buildout over the next 5-10 years
don't let the emotions and daily flows carry you away from the simplest strategy ever
things are looking a bit ugly here...
despite incredibly really good numbers & higher capex estimates from majority of the prints
either way, going to reassess strategy and get a better view of the overall AI market this weekend
not a single company is escaping this drawdown
today's after hours is the ugliest print of Q3 earnings so far
amazon, that small $2.7T company, wicked down 12% within seconds of the print
intel went down 17%
pinterest, roblox, reddit all down 15-20%
then binance rumors of getting hacked for $2B and $btc wicks below $79K for the first time since september
ugly
