The memory chip trade has gone from Wall Street darling to portfolio nightmare, and the Roundhill Memory ETF (BATS:DRAM) is feeling the heat.
The ETF plunged 18% on Thursday, extending its one-month decline to roughly 40%.
The steep reversal is particularly striking for an ETF that rode the artificial intelligence-driven memory boom to extraordinary gains earlier this year.
From 191% Rally to $7 Billion in Investor Losses
Morningstar’s Jeffrey Ptak noted on X that DRAM’s 54.2% drawdown began on June 22, following a spectacular 191% rally from its February inception to that peak.
According to Ptak, shareholders had collectively lost approximately $4.1 billion before Thursday’s collapse. He estimated that the latest selloff could push aggregate investor losses beyond $7 billion, against cumulative net inflows of $21.7 billion entering the session.
These figures represent estimated investor losses based on money flows and returns, rather than simply the decline in the ETF’s market value.
What’s Crushing The Memory Chip Trade?
DRAM’s troubles reflect a broader reversal in memory stocks as investors question whether the AI infrastructure boom can sustain the industry’s lofty expectations.
Thursday’s selloff was particularly punishing. Micron Technology (NASDAQ:MU) tumbled roughly 17.5%, while Sandisk Corp (NASDAQ:SNDK) plunged more than 20%. South Korean memory giant SK Hynix (NASDAQ:SKHY) also came under heavy selling pressure.
Several developments have intensified the pressure.
Qualcomm Inc’s (NADSDAQ:QCOM) latest results showed a 26% drop in handset revenue, raising concerns about smartphone-related memory demand. Meanwhile, Kioxia’s cautious quarterly outlook has fueled uncertainty over the memory pricing cycle, despite continued AI-driven demand for high-bandwidth memory.
Competition is another concern. China’s ChangXin Memory Technologies has reportedly made advances in denser memory chip designs, potentially challenging established manufacturers over time.
The broader AI trade has also been shaken by concerns over enormous data-center spending, uncertain investment returns and the prospect of tighter regulations following the Democratic Party’s midterm election gains.
Why DRAM Is Especially Vulnerable
Unlike diversified semiconductor ETFs, DRAM concentrates its exposure on memory and storage companies, including Samsung Electronics, SK Hynix and Micron.
That concentration helped deliver outsized gains during the memory boom. Now, it leaves investors especially exposed when the entire industry sells off at once.
Nonetheless, DRAM was showing signs of a potential comeback on Friday, climbing 7.3% in premarket trading as investors reassessed the battered semiconductor trade. This offers some relief, but it remains unclear whether the move signals renewed buying interest or merely a temporary bounce following aggressive selling.
Photo: Mentor57 / Shutterstock
