DRAM Jumps After Situational Awareness Rescue as Analysts Caution Memory Stocks May Fall Further

The Roundhill Memory ETF (CBOE: DRAM) has staged a cautious rebound in the past few days, moving from this month’s low of $44.4 to $50.3.

This rebound happened after Ken Griffin’s Citadel came to the rescue of Leopold Aschenbrenner’s Situational Awareness hedge fund.

Citadel beat out rivals Millennium Management and Jane Street to acquire the bulk of Situational Awareness’s roughly $16 billion public-equity portfolio, a privately negotiated block deal that analysts believe averted a disorderly fire sale of the fund’s AI-heavy holdings on the open market.

The deal helped push many technology and memory stocks higher.

In South Korea, Samsung Electronics and SK Hynix jumped by 27% and 30%, pushing the KOSPI Index up by over 18%.

In the US, top companies in Situational Awareness’s portfolio like Micron (NASDAQ: MU ), Intel, SanDisk, and Bloom Energy jumped.

Read Also: Top Four Nasdaq 100 Stocks to Watch Next Week: AMD, Uber, Palantir, Airbnb Analysts Warn that Rout in Memory Stocks May Not be Over DRAM ETF jumped as investors moved to buy the dip after the Citadel rescue.

Still, despite this, analysts are cautioning that the selling in memory stocks may not be over.

In a statement, a top analyst from Academy Securities said: "Taking the seller out of the market helped, but there is so much money in this space that is leveraged.

I think we’re going to start seeing some selling pressure again in the next two weeks." Leverage has been a major issue in the ongoing bull run, especially in South Korea.

Just recently, the main financial regulator halted new listings of single-stock leveraged ETFs after investors suffered huge losses.

It also placed strict caps and deposit requirements on existing ones.

Many South Korean investors have also borrowed heavily to take advantage of the ongoing boom in the stock market.

As such, in most cases, when reversals happen, margin calls jump.

Forced sales jumped to over 61 billion won ($42 million) on Thursday.

The happenings in South Korea are important for the DRAM ETF because Samsung and SK Hynix account for 26.4% and 22.7%, respectively of the fund.

On the positive side, big-tech companies like Apple (NASDAQ: AAPL ), Microsoft (NASDAQ: MSFT ), and Amazon (NASDAQ: AMZN ) pledged to continue spending in the AI industry, which may lead to more demand for memory products.

Top DRAM ETF constituents also published strong earnings this week.

Kioxia predicted that its second-quarter profit would jump to over $11.7 billion.

Seagate Technologies (NASDAQ: STX ) said that its first-quarter revenue would jump to $4.1 billion, higher than the expected $3.75 billion.

Other memory companies like Micron and Samsung also released strong earnings, with the main question being whether this growth will continue.

Read Also: TLT ETF Outflows Rise as Bond Vigilantes Push US 30-Year Treasury Yields to 5.26% Image: Shutterstock