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Table of Contents
🔥 Here’s What’s Happening Now
The market continues to shrug off bad news, yesterday we had this…..
Currently it seems that bad news is good news as this solidifies a rate cut next week. 25bps is expected but we still hear some people discuss 50bps. I can’t imagine that happens, but will the market be disappointed if it doesn’t?
Today is PPI, my sense is we get hotter than expected but it’s just a guess. Tomorrow is CPI. I don’t think it would be unwise to de-risk a bit ahead of these numbers. Looking at the options markets, the implied move from these numbers is historically low. When everyone is complacent I get nervous.
Any weakness on higher inflation should be short lived, as long as AI capex remains strong the market should continue higher. Once it slows then we have a real problem.
Speaking of tech spend, yesterday’s stock of the day, ORCL is up 32% pre market….
I typically don’t talk much about geopolitics because they tend not to impact markets intermediate term, and you typically fade any moves. However, you want to be aware. Currently we see blowback from Israel’s strike in Doha and Russian drones in Poland.
Poland is interesting to me as it’s an area I missed…..
Any weakness caused by this could end up being a buying opportunity.
I said yesterday that Bitcoin looks to be bottoming, but it doesn’t seem to want to go anywhere fast (big moves one way or the other in PPI/CPI could change that)……
I’m not typically a fan of selling calls, unless it’s 0DTE (BITK coming 9/24) but wouldn’t blame you if you wanted to sell calls against IBIT here.
🧠 Memory Is Back: Why HBM Is the Real AI Battleground
The Big Picture
For decades, memory was the commoditized backwater of semis—low margins, scale-driven.
AI has flipped that script: high-bandwidth memory (HBM) is now essential to run large models efficiently, solving the “memory wall” bottleneck.
HBM revenues at SK Hynix surged from $5.4B (Q2’21) → $17.1B (Q2’25), overtaking Samsung for the first time since the 1980s【FT】.
Margins: HBM ≈ 50–60% vs. 30% for DRAM—massive structural uplift【FT】.
Winners
1. SK Hynix (Biggest Winner – 9/10)
Lead supplier to Nvidia for HBM3E, riding AI demand tailwinds.
Locked up critical Japanese insulation tech (MR-MUF from Namics) that gave them yield & quality advantage over Samsung/Micron【FT】.
Now set to launch HBM4 with TSMC logic dies + NA-EUV lithography from ASML—doubling down on edge【FT】.
Investor angle: Core exposure; levered to Nvidia’s roadmap, TSMC alliance, and premium HBM margins.
2. Micron (7.5/10)
HBM3E has qualified for Nvidia’s AI GPUs—puts them in the winner’s bracket behind Hynix.
Execution improving vs. Samsung, but smaller scale.
Investor angle: Solid second-derivative play; benefits from Nvidia diversification strategy.
3. Nvidia (8.5/10)
The arbiter of HBM winners—chooses suppliers.
Locks in supply years in advance, ensuring moat against Chinese AI chipmakers.
With HBM, memory bandwidth often more important than raw compute for inference【FT】.
4. TSMC (8/10)
Moving into HBM stack via logic dies for HBM4, plus advanced packaging.
Risk: the more foundries & fabless designers move in, the less value accrues to memory specialists.
Losers
Samsung (6/10)
Caught flat-footed; HBM3E not yet qualified by Nvidia, trailing Hynix & Micron【FT】.
Optimized for the smartphone era, not AI—tens of billions lost in missed revenue since ChatGPT launched【FT】.
Recovery optionality: HBM4 could be a reset if hybrid bonding/packaging R&D pays off.
China’s CXMT (5/10)
Grown DRAM share from 0 → 5% since 2020, but 3–4 years behind in HBM【FT】.
US export controls choke access to EUV/advanced materials.
Testing HBM3, but real competitiveness unlikely near-term.
Legacy DRAM / NAND
Commoditized; still cyclical, margins inferior.
With AI workloads shifting value to HBM, vanilla DRAM/NAND pricing power looks capped.
Structural Risks to Watch
Foundry creep: With HBM4 & beyond, logic dies + advanced packaging increasingly sourced from TSMC, Samsung foundry, and design houses. Risk that memory makers lose bargaining power to “sexy” logic designers【FT】.
Alternative architectures: Huawei (AI SSDs), SoftBank/Intel (new stacked DRAM concepts). If HBM cost/energy curve stalls, disruption risk rises.
Geopolitics: US tightening export controls on HBM equipment underscores memory’s new strategic importance【FT】.
Ratings (1–10, 12–24 mo view)
SK Hynix (000660.KQ) – 9/10 → Market leader, Nvidia ally, tech moat.
Micron (MU) – 7.5/10 → Beneficiary of Nvidia diversification, margin uplift.
Nvidia (NVDA) – 8.5/10 → Memory kingmaker; HBM = bottleneck it controls.
TSMC (TSM) – 8/10 → Packaging + logic die inside HBM4 = new profit pool.
Samsung (005930.KQ) – 6/10 → In third place; HBM4 reset is the test.
CXMT (private, China) – 5/10 → Ambitious, but export choke limits competitiveness.
For years memory was boring. Now HBM is the hottest corner of semis, with 50–60% margins and Nvidia as kingmaker. SK Hynix has leapfrogged Samsung; Micron is catching up; China is stuck years behind. The trade: own the leaders with supply contracts to Nvidia/TSMC—watch Samsung for a possible comeback with HBM4.
📊 HBM Scenarios: Who Wins, Who Loses
Scenario 1: HBM Dominates (Base Case, 5+ yrs)
HBM stays the gold standard for AI training & inference, adoption scales across GPUs/accelerators, and margins stay 50–60%.
Winners
SK Hynix (9/10): Core supplier to Nvidia, leads HBM3E/HBM4 roadmap.
Micron (7.5/10): Gains share as Nvidia diversifies suppliers.
Nvidia (8.5/10): Gatekeeper controlling which HBM chips qualify, locks in multi-year contracts.
TSMC (8/10): Expands share via HBM logic dies + packaging.
Losers
Samsung (6/10): Playing catch-up, risks staying in third place.
Legacy DRAM/NAND producers: commoditized, margins trail.
Scenario 2: Alternative Architectures Break Through
AI firms find ways to reduce HBM reliance (Huawei AI SSDs, SoftBank/Intel stacked DRAM, hybrid architectures). Adoption accelerates if HBM costs/energy use remain high.
Winners
Huawei + Chinese fabs (6.5/10): Gain domestic share with substitutes to bypass HBM chokepoints.
SoftBank/Intel (7/10): Stacked DRAM concepts, new wiring systems open optionality.
Hyperscalers (AMZN, MSFT, GOOGL): Lower dependence on Korean/US supply chain = bargaining power.
Losers
SK Hynix / Micron: lose pricing leverage if buyers diversify away.
Nvidia: loses its unique chokehold on HBM-centric architectures.
Scenario 3: Geopolitical Fracture
US export controls harden, China accelerates domestic substitution, Western AI models vs. Chinese AI models run on parallel supply chains.
Winners
Micron (8/10): Only US-based memory champ; secure policy tailwinds.
TSMC (8/10): Western/Japan alignment ensures foundry role expands.
CXMT (5/10 today, 6.5/10 in fracture): Becomes strategic champion in China with heavy state backing.
Defense-linked utilities/contractors: benefit from dual-supply chain buildouts.
Losers
Samsung / SK Hynix: lose flexibility, forced to split supply chains.
US hyperscalers: face rising costs, tighter supply.
🧠 Investor Takeaways
Base Case (HBM dominance): Own SK Hynix, Micron, Nvidia, TSMC.
Alt Arch Disruption: Add optionality in Intel / SoftBank collabs, watch Huawei (private) moves.
Geopolitical fracture: Favor Micron as the US memory champion; CXMT gains relevance inside China.
AI is hitting the “memory wall,” and HBM is the bridge. Base case: SK Hynix and Micron ride Nvidia’s roadmap. But if costs or geopolitics bite, alternatives (Huawei SSDs, Intel-SoftBank DRAM) or fracture (Micron vs. CXMT) could redraw the map. The barbell trade: own HBM leaders now, keep optionality in alt-arch disruptors.
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📈 Stock Corner
Today’s stock is Freeport-McMoRan (FCX)….
Looks like they sold off on the Teck deal, but could get interesting on an undercut and rally at the 50 day moving average.
📬 In Case You Missed It
Yesterday we had another Market Wizard, Tom Basso. I love to talk to guys like this, I am a big believer you need your own strategy, your situation is different from Tom’s or mine. However, I think we can take lessons from guys like this an apply them to our own trading and investing…….
🤝 Before You Go Some Ways I Can Help
ETFs: The Antidote to Wall Street
Inside HEAT: Our Monthly Live Call on What Wall Street Doesn’t Want You To Know
Financial HEAT Podcast https://www.youtube.com/@TuttleCap Freedom from the Wall Street Hypocrisy
Tuttle Wealth Management: Your Wealth Unshackled
Advanced HEAT Insights: Matt’s Inner Circle, Your Financial Edge
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