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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"AI-driven demand for memory chips has created extraordinary profit opportunities for semiconductor manufacturers, with Micron achieving 68% net margins on 346% revenue growth. The South Korean KOSPI surged 101% in the first half of 2026 driven by SK Hynix and Samsung."
The explosive growth of AI services has triggered unprecedented demand for specialized memory chips, particularly High Bandwidth Memory used in AI accelerators and data center GPUs. Leading memory chip producers Micron, SK Hynix, and Samsung have seen their stocks soar 242%, 226%, and 99% respectively since March 31st, driven by the ability to charge dramatically higher prices given surging demand and constrained supply. Micron achieved an astonishing 84.9% gross margin and 68.1% net profit margin on revenue growth of 346%. However, this extraordinary growth stems from scarcity economics rather than sustained demand creation. Memory chip makers are investing $25-30 billion each in capital spending for 2026, with additional capacity expected to ramp up in 2027 and meaningfully add to supply in 2028 and beyond. This suggests manufacturers will continue to exercise considerable pricing power in the near term, but that pricing power could erode over the next couple of years as increased capacity eases supply constraints and reduces margins, potentially returning the industry to its prior pattern of rapid growth and dramatic collapse. The lesson from history is that durable growth comes from sustained demand, not constrained supply.
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