There’s a hot new sector fueling the stock market this year but you won’t find it on any official market trackers.
Portfolio managers are calling it “memi”—a portmanteau of “memory” and “semiconductors” (known as “semis”)— and while it doesn’t have its own ticker, the sector is gorging itself on the $700 billion AI buildout. One of the bottlenecks large tech companies like Amazon, Google, Meta, and Microsoft face in the race to build data centers is in obtaining memory chips. Most of the supply comes from three monster memory-chip manufacturers: Micron Technology, South Korea’s SK Hynix, and Samsung, which are each now worth $1 trillion or more in market capitalization and climbing.
The catch for investors however, is that memis are fueling growth in U.S. small-cap funds, international, and emerging market funds in all different corners of the market. So a portfolio that looks spread out and de-risked might be more exposed to memis than previously thought. And while the major memory players are enjoying a skyrocketing run, there could come a painful return to earth if big tech companies pull back on the cash they’re spending, which may already have begun given some of the recent corrections in tech stocks.
