June Markets in Focus: Dissecting the Memory Trade + Healthy Rotation Out of Tech

**SPEAKER_2** (0:12)
Welcome in to another episode of our Markets in Focus series here on the Inside the ICE House podcast. And joining us as always every month to talk market trends and market movements is Phil Rosen. Phil, thanks so much for joining us Inside the ICE House. Happy to have you here.

**Phil Rosen** (0:26)
Thank you for having me.

**SPEAKER_2** (0:27)
So let's start with NYSX component Micron after they just reported their Q3 earnings. When you look at their latest results specifically, especially with how they're framing AI driven memory demand, what just stood out to you the most?

**Phil Rosen** (0:41)
Micron is the new NVIDIA. I mean, if you look at the anticipation building up to earnings and then how they absolutely destroyed expectations on earnings, I think they made 41 billion in the quarter and then they guided to 50 plus billion in the next quarter. Both numbers beat expectations.
This is the same thing we've seen every quarter with NVIDIA. The AI bears get very nervous and jittery ahead of the earnings call. And they say, look, we are gonna find out that the AI trade is over today.
That has happened for the last eight quarters with NVIDIA. And now Micron survived that test and they've extended the AI trade for at least another quarter until they report earnings again, but it's an unbelievable number. And Micron has come out and said, look, we expect 2027, 2028 memory is still gonna be supply constrained and demand is still gonna outpace all these numbers here. So generally, when you zoom out, that's very bullish for anyone exposed to AI, which is at this point, everybody who's in the S&P 500 And you're still gonna have these doubters that come out and say, look, this is a cyclical business. And historically it has been, but again, I look at the generational technology that we are being absorbed by from every corner of the economy right now. And to me, that gives me more hope and bullishness that maybe Micron's run will extend further than anyone thinks because it's much less cyclical than maybe in 2018 what we saw when prices got cut in half and the stock dropped so severely. I still am very bullish. I can continue to personally own the stock Micron. And I don't know if the bears have enough ammo to grasp onto right now.

**SPEAKER_2** (2:32)
So, the memory trade specifically I think has been one of the most powerful undercurrents in tech really over the past year, even if it doesn't always get the same headlines as like GPUs or the hyperscalers, so be it. When you step back and think about memory, or you think about memory, how should investors be thinking about that trade specifically today?

**Phil Rosen** (2:49)
I think what's interesting to me is we're going to see increasingly a K-shaped divergence stemming from the memory trade. So, investors will do very well who are exposed to the memory trade, something like Micron, SK Heineck, Samsung. These are the three names that everyone points to and everyone's made a lot of money on if they've been in them for the last year and a half or so.
But then, within 24 hours of Micron's earnings report, where they had their best quarter ever, blew away all expectations, Apple and Microsoft came out and said, we have to raise prices on our laptops, Xboxes, consoles. And that to me was really the first red flag about how rising demand for memory and AI chips, that is going to start trickling down in a negative way to everyday consumers.
You and I will have to pay more for our laptops next time we go, pay more for our iPhones next time we go, or I don't know if you're a gamer, but we're gonna have to get more expensive Xboxes moving forward too, because of the same catalyst that has made Micron boatloads of money. So you have this K-shaped divergence already emerging in earnings and in consumer goods that are in the tech sector. That's probably gonna start trickling out beyond just Apple and Microsoft, and we're gonna see more and more companies either using memory prices as a reason or an excuse to raise prices or actually saying, hey, we have to raise prices, we don't have a choice to maintain our profit margins. That's gonna be one big thing to watch, and I think it's gonna eventually make AI less and less popular as well as a technology and as a trade. Investors will talk about it still, but outside Wall Street, it's gonna be not so kosher to be praising AI.

**SPEAKER_2** (4:39)
Now, I want to shift the conversation to what we've seen as a lead. We got a notable tech sell-off recently, especially in some of the names that obviously had been leading the rally. When you see that kind of move, do you interpret it as just sort of a healthy reset that happens in a typical market cycle, or does it feel like a more meaningful shift beneath the surface and something that people really need to keep an eye on?