‘Biggest bottleneck in the AI buildup’ fuels DRAM ETF to record

The Roundhill Memory ETF (DRAM) just hit $9.8 billion in assets under management in 43 days— the fastest pace ever for an exchange-traded fund, according to TMX VettaFi.

Ahead of Thursday’s milestone, the CEO of Roundhill Investments told CNBC’s “ETF Edge” the rapid growth is tied to the limited number of companies involved in producing high-bandwidth memory or DRAM chips. They’re considered integral to the artificial intelligence revolution.

“Investors are waking up to the fact that the biggest bottleneck in the AI build-out is actually memory chips,” Dave Mazza said Monday. “There’s an incredible amount of supply and demand imbalance with memory which is one of the reasons why the stocks have been performing so well.”

Mazza notes just a small number of companies are involved in making high-bandwidth memory chips.

“This is an area where memory has historically been incredibly cyclical. We’ve seen boom-and-bust cycles. And, one of the reasons why it was so cyclical is memory is actually found everywhere — in your smart TV to your phone in your car,” he said. “What’s changed is actually data centers and the growth and build-out of AI.”

Mazza estimates the supply and demand imbalance could extend into 2028 due to AI demand and the data center hyperscaler build-out.

In a special note to CNBC, TMX VettaFi’s Todd Rosenbluth reacted to the DRAM’s popularity, which is considered the hottest ETF since bitcoin mania.

“I’m shocked by the rapid adoption of the ETF, as memory stock demand through an ETF was not pent up like it was for bitcoin exposure,” the firm’s head of research and editorial wrote on Thursday. “Thematic ETFs continue to gain traction by offering exposure to fast-growing companies.”

Citi Research’s Drew Pettit is confident that the strong run will continue.

“The price momentum has earnings momentum backing. So, this is the place where we have seen the best earnings revisions this year in the United States and globally,” the firm’s research director of U.S. equity and ETF strategy told “ETF Edge” in the same interview Monday with Mazza. “If we’re up 300%, but your earnings expectations are up six-to-eightfold for the next few years, it still comes back reasonably priced to us.”DRAM is under pressure during Friday’s trading. But it’s up more than 80% since its inception.

DRAM is under pressure during Friday’s trading. But it’s up more than 80% since its inception.