The Roundhill Memory ETF (DRAM) has lost the momentum it had a few months ago as most memory stocks have pulled back. It has slipped to $50.9, down by 37% from its all-time high. Still, there are some reasons why this fund may rebound in the coming weeks or months.
DRAM may benefit from the ongoing accumulation
One reason why the DRAM ETF may be on the cusp of a bullish breakout is that American investors are accumulating the fund. ETF Db data shows that its inflows have continued buying, even as it remained in a bear market.
The fund had $222 million in inflows on August 7, bringing the monthly inflows to over $5.72 billion. This growth has brought its cumulative inflows to $23.79 billion, making it one of the fastest-growing funds this year. It now holds $23.8 billion in assets and is one of the top-traded funds in Wall Street.
The ongoing accumulation is happening even as most constituent companies remain in a bear market. Micron stockhas dropped by over 30% from its all-time high, while South Korean names like Samsung and SK Hynix have fallen by 31% and 50%, respectively, from their highest levels this year. Other top constituent companies like SanDisk, Kioxia, and Western Digital have all retreated by double digits.
AI boom is accelerating
The other reason why the DRAM ETF may rebound in the near future is that the AI boom is accelerating. Top companies in the sector like Microsoft, Alphabet, Meta Platforms, and Amazon, plan to spend over $750 billion this year. Tesla and SpaceX are building their semiconductor plant in Texas, while Intel is raising funds to continue its investments.
Other companies in the industry, like CoreWeave, Nebius, Riot Platforms, and MARA plans to keep spending as demand rises. Just this week, Anthropic reached a $9 billion deal with Riot Platforms.
Also, Nvidia has come up with a plan to keep the data center boom going on. It has reached a $500 billion deal with top financial institutions like Goldman Sachs, BlackRock, and Brookfield to finance its customers. If this model succeeds, it means that memory names will benefit.
All these companies published strong results
Further, all companies in the DRAM ETF released strong financial results. Micron’s revenue jumped to over $40 billion, while SanDisk’s rose by over 300% in the last quarter. SK Hynix, Samsung Electronics, and Kioxia released some of the best numbers ever.
Most notably, these firms have announced strong forward guidance, helped by their long-term contracts with companies like Microsoft and Meta Platforms. For example, SanDisk has reached major deals with companies such as Meta, setting the floor and ceilings for its memory products.
At the same time, the companies are trading at friendly valuations. SanDisk has a forward price-to-earnings ratio of 5.96, while Western Digital trades at a multiple of 21. Micron, despite its strong revenue and margin growth, has a multiple of 11.8.
DRAM ETF technical analysis
DRAM ETF chart | Source: TradingView
The daily chart shows that the Roundhill Memory ETF may be about to bounce back in the coming days or weeks. It has formed an inverted head-and-shoulders pattern and is now along the neckline. The Relative Strength Index (RSI) has continued rising and is about to cross the neutral level.
Therefore, the fund will likely have a strong bullish breakout in the coming days, potentially to the key resistance level of $65. A move above that level will point to more gains, potentially to the all-time high.
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