Riding the Memory Supercycle Daenerys' Dragon-Sized Data Center Play

• Analyze the Roundhill Memory ETF (DRAM) and its potential for exposure to the memory supercycle.
• Evaluate Modine Manufacturing's (MOD) relationship with hyperscalers and its investment potential.
• Assess Micron's (MU) rapid growth and its valuation in the context of rising memory prices.
• Examine Nvidia's (NVDA) strategic investments in neoclouds like CoreWeave, Nebius, and Iren and the broader implications for data center infrastructure.

DRAM ETFs: Is It Truly "Late" To The Party?

They say winter is coming, but for the memory market, it feels like summer just arrived. The Roundhill Memory ETF, DRAM, has been raking in gold like the Lannisters, with over $5 billion in a single month. When I glanced at its holdings—SK Hynix, Micron, Samsung, Sandisk, Seagate, Kioxia, and Western Digital—I thought, 'This is a cocktail fit for a Khaleesi'. It's a global buffet of memory makers, some not even listed on American exchanges. These Korean and Japanese firms are breathing fire. So, while some whisper that I am "late," if you hold this ETF, you might just have the key to the bottleneck where AI's insatiable hunger for computing power drives ever-rising prices. Sometimes, you must "break the wheel" to seize new opportunities.

Modine Manufacturing: Unearthing Hidden Dragons

My loyal subject, Herb Greenberg, recently highlighted Modine Manufacturing in his 'Red Flag Alerts' newsletter. The stock chart is indeed a sight to behold, and their reputation in heating and cooling precedes them. They boast strong ties with the hyperscalers. Yet, Herb raises concerns about their transformation and potential risks. While it seems a bit rushed, the deeper I delve, the more these hyperscalers seem enamored. Even if some doubt their client list, I'm wagering against the naysayers. Modine is a buy—a less-discovered gem, perhaps even better than Vertiv or Eaton, and certainly superior to Carrier, which has too much exposure to residential HVAC. What a management team. And if you're looking for other key market insights, I recommend reading Global Energy Markets Teeter on the Brink Strait of Hormuz Closure Sparks Chaos, which highlights the delicate balance between global energy supply and geopolitical stability. I am grateful to Herb for the warning, even as the chart indicates that I am not early.

Micron's Meteoric Rise: A Queen's Perspective

Micron surged over 200 points in a week—from $542 to $747 a share—without me even noticing. Absurd, you say? Perhaps. But remember, Micron trades at a mere 9 times its next 12 months' earnings, according to FactSet. This could be even lower as they raise prices. So, you are potentially buying one of the cheapest quality stocks in the known universe. When Melius Research's Ben Reitzes initiated coverage with a 'buy' recommendation, he didn't seem late; he seemed prescient, capturing a 50% gain in mere weeks. Now, you cannot read about these companies without wanting to acquire them.

Hunting Sleeper Cells: Tertiary Plays and Material Matters

We are now eyeing the tertiary plays, the incidentals, because the gains in memory, cooling, and construction are already substantial and well-documented. Why not Nucor? The price-to-earnings multiples remain enticingly low in many cases. Consider the market's reaction to Taiwan Semi's potential deal with Intel, even though it was public knowledge. Taiwan Semi benefits by allocating capacity to higher-paying clients, raising the possibility of increased numbers. This is how you 'break the wheel'.

CoreWeave and Nvidia: A Symbiotic Dance of Dragons

Did you witness CoreWeave's stock 'collapse' after reporting record revenues but no profits? CEO Michael Intrator highlights improved bond ratings and the ability to borrow at around 6%. Why wouldn't they build as many AI data centers as possible, especially given Jensen Huang's endorsement and Nvidia's investments? Huang saved CoreWeave's IPO last year with a $250 million anchor investment. Nvidia now owns almost 13% of CoreWeave, including a $2 billion investment in January. They are joined at the hip, just like dragons and their riders. Nvidia has also invested in Nebius and Iren, turning them into significant players. I met the Nebius folks at Nvidia's GTC event in San Jose—an encounter facilitated by Jensen himself. Who knew they would become so pivotal? Perhaps these deals feel less special now, or perhaps the market is shifting towards CPUs made by Intel. The fickle nature of buyers makes it all feel "late." Still, these pre-Nvidia plays feel ripe for the picking.

A Charitable Trust's Dilemma: Navigating the Winds of Change

I run a charitable trust where I prefer established companies with longevity. I aim for value over high growth, but what happens when that strategy backfires? I initiate positions in Johnson & Johnson and Cardinal Health, only to see them falter. Ironically, the safe stocks become dangerous, while the high-risk names like Micron and Western Digital seem to have unlimited potential. I don't want to buy a Micron or a Western Digital because I remember their past disastrous outcomes. But now, they appear to be magnificent longs. So, I contemplate buying the DRAM ETF or a stake in Micron. But first, many must be convinced of the data center thesis. There is too much money chasing too little profit, or perhaps, substantial losses. I find myself in agreement with Amazon CEO Andy Jassy. These are long-term plays, measured in decades, and we are only in the second year of the first decade. I should have bought Micron over Cardinal, or Sandisk over J & J. It's difficult to imagine data center stocks declining, given the budgets and projected profits of these hyperscalers. The key is to focus on the profits about to be made, rather than the losses being generated now. I must buy some Micron.