Summary
- The AI infrastructure boom propelled memory-chip companies to extraordinary valuations before sharp pullbacks.
- Similar reversals in precious metals and Strategy demonstrate that genuine long-term trends are not immune to market cycles.
- The lesson is that structural trends can be real while their valuations remain cyclical.
The term “paradigm shift” is often applied casually to what may simply be rapid rotations between fashionable assets, the latest example being the AI-driven semiconductor boom.
Hyperscalers such as Amazon (AMZ) and Google (GOOG) are spending heavily on data centres containing thousands of AI accelerators. These systems require enormous quantities of high-bandwidth memory for processing and NAND flash for storage, tightening supply and lifting chip prices.
Micron Technology (MU) produces DRAM, NAND and other memory products, while Sandisk (SNDK) specialises in NAND flash and solid-state storage. Micron rose roughly 700% year over year, and Sandisk gained more than 4,000%. Both have subsequently retreated from their peaks, illustrating how quickly enthusiasm can reverse.
The excitement created the largest U.S. IPO of all-time in SpaceX (SPCX), while SK Hynix (00060), a leading supplier of high-bandwidth memory, raised $26.5 billion through the largest-ever U.S. listing by a foreign company. Its ADRs initially surged, but subsequent volatility exposed the risks of buying into peak optimism with SK Hynix down 15% during Asia market hours.
