HALO, which stands for heavy assets, low obsolescence, is the trade of the year. Global investors have been bidding up makers of everything, from cars to PCs, betting that many may benefit from the trillion-dollar AI investment boom.
But worries are heightening that this trade is more a fad than a trend. A parabolic rally in the Philadelphia Semiconductor Index has drawn comparisons to 1999, before the dot-com bubble burst. Further, there’s evidence that the biggest winners from this AI stock boom are aided by momentum chasers. The pick-and-shovel theme might just be a nice story that investors tell themselves to justify risk-taking.
This tension is most evident with the three memory chipmakers — Samsung Electronics, SK Hynix and Micron Technology — which dominate global dynamic random-access memory, or DRAM, sales. No doubt, retail investors chasing winners is a key factor that has propelled the trio to the exclusive $1 trillion club this year. However, these hardware companies are also starting to generate enviable earnings. The question then becomes, when hot money inevitably leaves, will they still be worth $1 trillion each?
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