The Memory Selloff: Record Profits, Collapsing Stocks

Today, we need to discuss the sell-off in AI and memory stocks, including sharp declines in Korean equities and SK Hynix despite insane earnings. 

We also cover the fragility of leverage-driven markets, China’s memory industry, and the outlook for continued AI-related demand for chips and infrastructure.

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TIMESTAMPS

0:00 Memory Stocks Crash
3:52 Why SK Hynix Is Dumping
7:02 Leverage Fuels the Selloff
8:30 China’s Memory Surge
12:00 ASML Rival Panic
15:47 AI Money Shifts Upstream
17:23 Open Source Misconceptions
18:56 GPUs Need More Memory
21:04 Agentic AI Drives Demand
23:08 What Investors Should Do

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RESOURCES

Josh: https://x.com/JoshKale

Ejaaz: https://x.com/cryptopunk7213

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Not financial or tax advice. See our investment disclosures here:
https://www.bankless.com/disclosures⁠

Josh works with Anthropic as a contractor. All views expressed are his own and do not represent Anthropic, its leadership, or its affiliates. Nothing in this episode is investment advice.

Creators and Guests

Host

Ejaaz Ahamadeen

Host

Josh Kale

What is Limitless: An AI Podcast?

Exploring the frontiers of Technology and AI

Josh:
The U.S. stock market just lost more money than we did in the 2008 financial

Josh:
crisis over a matter of seemingly a couple of days. It's been the worst memory

Josh:
crisis, the worst stock market crash in quite some time because the numbers have gotten so high.

Josh:
Memory has run up to astronomical levels. But what's interesting here is this

Josh:
is backed up against some counterfactual evidence.

Josh:
SK Hynix, that Korean company that could seemingly do absolutely no wrong,

Josh:
they recorded more profit than they did revenue this last quarter.

Josh:
So the numbers are great, but the stock market is saying, wait a second,

Josh:
something's not right here.

Josh:
So we have some insight. In this episode, we're going to unpack this,

Josh:
why the market is reacting the way it is, and evaluating whether or not it's

Josh:
right or if it's a pretty serious overreaction.

Josh:
I'm currently sitting in the middle of a hotel, in the middle of nowhere,

Josh:
on some spotty Wi-Fi, trying to get this episode out to you guys.

Josh:
Because, I mean, this is an incredibly important topic. This feels very timely

Josh:
and important to navigate. So, Ejaz, let's unbundle what's happening here in

Josh:
the market. I mean, worse than 2008 is crazy.

Ejaaz:
Yes. So I'm seeing a lot of commentary in the markets right now,

Ejaaz:
which is the AI bubble is finally popping. It's unwinding. It's been happening for four weeks.

Ejaaz:
The Korean stock index itself is down over 30%, which is just the largest drawdown they've ever had.

Ejaaz:
And so I want to explain what the damage is. And then let's get into whether

Ejaaz:
this is right or wrong, because I honestly have some pretty strong opinions

Ejaaz:
as to why this is completely wrong and why it's like one of the bigger opportunities right now.

Ejaaz:
So what is the damage? What you're seeing on the screen right now is the Korean

Ejaaz:
stock market. And the reason why I'm showing you the Korean stock market versus

Ejaaz:
the American stock market is because they're influencing each other quite a bit.

Ejaaz:
Now, Korea has three of the biggest, or rather two of the biggest memory manufacturers,

Ejaaz:
SK Hynix, which is the number one, and Samsung.

Ejaaz:
And they provide pretty much all the memory that is required for the GPU makers,

Ejaaz:
the CPU makers, or whatever type of AI infrastructure you can dream of.

Ejaaz:
So it's a very essential component.

Ejaaz:
Now, the issue is, it's down 32%, and that is because there's a lot of memory

Ejaaz:
providers that have been dumping completely. So if I pull up SK Hynix right

Ejaaz:
over here, over the last month, it's down almost 25%.

Ejaaz:
If I pull up SanDisk, right? SanDisk Corporation creates a different type of memory for AI.

Ejaaz:
They're down 50%. This is the darling stock, by the way, which was up like-

Ejaaz:
This is trending like a meme coin, man. Yeah, I know.

Ejaaz:
But it also pumped like a meme coin.

Ejaaz:
I think it was up like something ridiculous, like 4,000%.

Josh:
And even though- Well, can we look at the year chart?

Ejaaz:
Yes, let's look at the year chart.

Josh:
Just to see what that- Yeah.

Ejaaz:
The year chart is still up 2,200%. So even though it's down 50%, it's still up 2,200%.

Josh:
Oh, this is so unbelievable.

Ejaaz:
And so the question on everyone's mind is, why are these stocks,

Ejaaz:
specifically AI stocks, specifically memory stocks, dumping

Ejaaz:
on the back of some amazing news, which is these companies are still pulling

Ejaaz:
in more revenue, more profit, as you mentioned earlier, than they've ever done in a single quarter.

Ejaaz:
SK Hynix released their quarterly earnings literally yesterday.

Ejaaz:
I was reading it last night before in preparation for this episode.

Ejaaz:
And Josh, to your point, Their revenue increased by 354%, but their profit margins increased by 555%.

Ejaaz:
They made more money in this quarter than they did in the entirety of 2025,

Ejaaz:
last year. So the question on everyone's mind is,

Ejaaz:
Do these stock price movements make sense at all?

Josh:
The thing that like, well, first of all, the answer is no, because I read through

Josh:
this earnings report too, and I was immediately confused because how on earth

Josh:
do you have more net profit than revenue?

Josh:
It's 118% net margins. It's like unbelievable profit margins.

Josh:
It's an incredible business. It seems like it's doing remarkably well.

Josh:
And yet the market seems to just be kind of done with this.

Josh:
It's like the Toy Story meme where they just kind of throw the toy out like,

Josh:
I'm done with this toy. But the numbers don't make any sense at all.

Ejaaz:
Can I tell you why?

Josh:
Yeah, please. Like, I'm trying to understand. I'm reading through these notes

Josh:
here. I'm like, okay, what's wrong here?

Ejaaz:
Okay, so there's two reasons why I think SK Hynix or memory stocks,

Ejaaz:
AI stocks in general, are dumping.

Ejaaz:
Number one, analysts at these different firms on Wall Street or wherever set

Ejaaz:
targets, right? So expected revenue growth for a lot of these companies.

Ejaaz:
Now, SK Hynix technically missed their revenue target by around $1.7 billion.

Ejaaz:
You're seeing this on the screen right now.

Ejaaz:
What I would like to draw your attention to, Josh, is this. You see that?

Ejaaz:
That is 250% of revenue growth from the previous year.

Ejaaz:
And that is almost 600% in operating profit from the previous year.

Ejaaz:
So whilst they may have missed some random analysts' projections,

Ejaaz:
They've still excelled and compounded at a much more rapid rate than any other

Ejaaz:
company in the world. It is extremely impressive. These things are printing money.

Ejaaz:
But the question should then be, why were the analysts even predicting this

Ejaaz:
target in the first place, right?

Ejaaz:
And I'll give you an answer for this. SK Hynix specializes in this thing called

Ejaaz:
HBM, high bandwidth memory. We've spoken about this a lot on the show, right, Josh?

Ejaaz:
Now, they are the number one provider of HBM. They only dedicate their chip

Ejaaz:
fab capacity to create HBM.

Ejaaz:
Now, if you look at the other competitors, Samsung, Micron, they do HBM,

Ejaaz:
obviously, but they also do some other cheaper memory for like your mobile phone

Ejaaz:
or for your computer. It's called DRAM, and you're basically able to use that

Ejaaz:
for other different types of gadgets.

Ejaaz:
Now, because SK Hynix is so focused on HBM, they have run out of supply,

Ejaaz:
so they can't possibly sell anymore.

Ejaaz:
So they're selling off on the best news ever, which is they've sold out all

Ejaaz:
their entire supply for this quarter.

Ejaaz:
And so they have to move on to the next quarter's supply in order to get higher profit margins.

Ejaaz:
Now, if you look at Samsung, if you look at Micron, they have dumped,

Ejaaz:
but they have dumped less because they're selling more DRAM.

Ejaaz:
Have they made as much money as SK Hanex? No, because HBM is priced higher, uses more wafers.

Ejaaz:
So the whole thing basically is ridiculous.

Ejaaz:
SK Hynix has created a really good product. They have sold all of the product

Ejaaz:
that they could potentially make in that single quarter.

Ejaaz:
And because they've done that, they have now not been able to reach a specific

Ejaaz:
target that this random Wall Street analyst has set for them because they've

Ejaaz:
dedicated all their chip capacity to the specific thing.

Ejaaz:
So let me know if that makes sense. But basically, it's crazy.

Josh:
If I had to summarize it probably in three points, it's like,

Josh:
okay, the first one is the stock market rating, like a lot of the analyst ratings,

Josh:
where basically you could,

Josh:
you could think of it like if you if you give your kid a hundred dollars for

Josh:
straight a's and they bring home like

Josh:
four a's and then an a minus and everyone like freaks out because they're like

Josh:
oh my god no this isn't what you promised yes that's the first thing the second thing is the

Josh:
record earning surprises like basically like you mentioned they've fully sold

Josh:
out of their inventory for 2026 yes there is no more capability for them to sell more by the way,

Josh:
And 27, there's no ability for them to sell more or sell it at a higher margin

Josh:
because it's already pre-sold. So therefore, you eliminate a lot of the upside surprises.

Josh:
And there really is only downside surprises possible in the case one of these

Josh:
deals don't work out how they expect or things fall through.

Josh:
So the upside is kind of capped in terms of surprises. Downside is not.

Josh:
And the third is there is this two times leverage ETF that started trading just

Josh:
a couple weeks ago, July 13th. So I mean, of course, being a Korean market,

Josh:
a lot of people, it's funny, like there's this thing.

Josh:
It's kind of known with the Korean stock market, where they are the most aggressive

Josh:
gamblers per se. They like to take on the most risk.

Josh:
And this two-time leverage fund, I'm sure, fed right into that.

Josh:
So there was a lot of leverage baked into the price of these stocks.

Josh:
And any sort of sell-off event creates this cascading liquidation event.

Josh:
And I'm sure we saw a lot of that as well with a 2x leverage stock.

Josh:
So the convergence of those three things...

Ejaaz:
Actually, on that, Josh, there's some news from Chucan I saw this morning that

Ejaaz:
JP Morgan... So you mentioned the leveraged ETFs and you're right.

Ejaaz:
Like this has led to a lot of the dump because there's people like couldn't

Ejaaz:
afford the stocks that they were buying. They were too leveraged up.

Ejaaz:
And JP Morgan this morning reported that the leveraged ETF drawdown,

Ejaaz:
the liquidation specifically is about 90% complete.

Ejaaz:
So if you wanted to kind of like extrapolate, you'd probably see this bottoming sometime soon.

Ejaaz:
So like this drawdown can't go on forever and we're probably nearish a point

Ejaaz:
where it's gonna reach its bottom before like everything starts to like settle

Ejaaz:
and maybe kind of like recoup.

Josh:
Yeah, well, it seems like, I mean, we had this earlier in the year where there

Josh:
was that big sell-off. I remember Bill Ackman famously saying like,

Josh:
hey, this is oversold. The market is wrong.

Josh:
You're overreacting. We are probably getting close to something like that now.

Josh:
Again, not financial advice, who the hell knows?

Josh:
But there are some signs that things are shifting.

Josh:
And I want to shift our attention to China now to talk about what's shifting

Josh:
over there because there is some, you could say that China played a fairly large

Josh:
role in this and will continue to play a fairly large role going forward,

Josh:
what you'll notice is that we're not really talking much about

Josh:
the united states stocks like this is very much an international this is a global

Josh:
marketplace now because everyone is so interdependent on these supply chains

Josh:
and china has a very big one with memory and there's a company i'm going to

Josh:
try to pronounce this right shangjin

Josh:
memory technologies yes cxmt is a ticker basically.

Josh:
And they had themselves a public ipo a public debut in which they traded up,

Josh:
466 percent in one day which is instantly the most valuable china listed company

Josh:
ever, which is more than Alibaba or Tencent.

Josh:
And they raised about $9 billion.

Josh:
So you're thinking, who on earth is this company? I've never heard of CXMT.

Josh:
Well, they're the world's number four DRAM maker.

Josh:
Now you'll notice we normally talk about the top three DRAM makers.

Josh:
A new entrant has entered the category.

Josh:
And I have to ask, Ejaz, is this like a little concerning because there's more

Josh:
distribution of people who are able to make this memory?

Josh:
I mean, over the last four years, I believe. They've gone from a 1% market share

Josh:
to a nearly 10% market share. And it seems like that number is going up only.

Josh:
They have the backing of China behind them. You know the Chinese CCP is going

Josh:
to be really pushing for them to win.

Josh:
Is this playing a role into the memory problem as well? Yes.

Ejaaz:
And it's not as much of a problem as people make it out to be.

Ejaaz:
So let me actually ask you this question.

Ejaaz:
Of the non-Chinese memory makers, so SK Hynix, Samsung, Micron.

Ejaaz:
Who would you think is the biggest region that they're selling all their memory

Ejaaz:
to? Is it the West or is it China?

Josh:
I would assume it's the West because we have all of these GPUs.

Ejaaz:
You'd be right. It's overwhelmingly the West. And the issue there is there's

Ejaaz:
not enough supply to meet the West's demand, right?

Ejaaz:
So guess who is starved of memory?

Ejaaz:
It's China. China star.

Josh:
Oh, those open source guys, huh?

Ejaaz:
Yeah, those open source guys. So listen, they're not getting access to any of

Ejaaz:
the American chips. NVIDIA has a trade restriction. They can't sell them frontier chips.

Ejaaz:
And they don't get access to any of SK Hynix and Samsung's memory chips because

Ejaaz:
they're selling it to the West. Micron is obviously selling it to the West as well.

Ejaaz:
So they have to kind of do their own thing. That company is the number four

Ejaaz:
memory provider now, CXMT, because of course, Chinese AI labs like Moonshark

Ejaaz:
creating Kimi K3, GPU creating GLM.

Ejaaz:
They also need memory for their GPUs to train their own AI models.

Ejaaz:
So CXMT stepped up and basically IPO'd and went up 500% in a single day,

Ejaaz:
making them the most valuable company in China.

Ejaaz:
Their valuation, I think right now, is roughly around the price of Micron or

Ejaaz:
the market cap of Micron.

Ejaaz:
And they did that in like a single day, just like the craziest IPO ever.

Ejaaz:
Now, the reason, again, for why this is the case is we are starved of memory

Ejaaz:
in AI. It's just a very simple thesis.

Ejaaz:
You need memory to remember everything that you type and talk to Claude and ChatGPT about.

Ejaaz:
You need memory to keep your agents running 24-7. And that memory demand isn't

Ejaaz:
just a linear line. I'm trying to figure out what this looks like in the camera,

Ejaaz:
but it's not a linear line. It is a completely exponential line.

Ejaaz:
And if you look at the demand growth for any of these memory supplies.

Ejaaz:
It literally looks like this. And you know what else looks like this?

Ejaaz:
The profit margins and the revenue that we're seeing. So whether it misses targets

Ejaaz:
by like a billion dollars or not, it does not matter. So that's one thing.

Ejaaz:
But there's two other news items why China is causing stocks to crash, Josh. The other one,

Ejaaz:
Have you heard of this company called asml based in the netherlands

Josh:
Yeah might have heard that like singular company that the entire world is.

Ejaaz:
Built up yeah yeah do you remember they create these like 300 million dollar

Ejaaz:
machines which are used by tsmc yeah exactly euv extreme ultraviolet lithography and they use

Josh:
Where they shoot they shoot little pieces of of light at tin and then the tin

Josh:
turns into light that doesn't exist anywhere else on the planet that was a banger this crazy scientific.

Ejaaz:
Company yeah exactly that was a good episode by the way for the ogs who know we're referencing.

Josh:
Go listen to that one because ASML is a crazy company.

Ejaaz:
It's such an awesome company. Anyway, so this company, it's one of a kind.

Ejaaz:
It's based in the Netherlands. They create these $300 million machines.

Ejaaz:
And I think they pump out a couple hundred a year. They're so hard to make.

Ejaaz:
They have teams and teams of people trying to create these things.

Ejaaz:
It is incredibly difficult to do. And it's very secretive. They have not released

Ejaaz:
any blueprints such that it has been super hard to replicate this.

Ejaaz:
They've tried many times in the West. Elon Musk has tried.

Ejaaz:
You just haven't been able to do it. And it is pinnacle to have these machines

Ejaaz:
to create next generation AI chips. So NVIDIA, very close to ASML.

Ejaaz:
China, a company in China, announced, very surprisingly, that they've been able

Ejaaz:
to replicate a version of these $300 million machines.

Ejaaz:
It's called DUV. It's called Deep Ultraviolet. So, it's not quite extreme,

Ejaaz:
but it's Deep Ultraviolet. And I have to stress, it is a prototype machine.

Ejaaz:
This hasn't been scaled. And let me ask you this, Josh. How many of these machines

Ejaaz:
do you think they're creating for the rest of this year or in a year that they're

Ejaaz:
targeting for a year? dude

Josh:
Not many it's like low hundreds dude.

Ejaaz:
No it's five

Josh:
Five oh shit okay that's way less than.

Ejaaz:
I'm aiming for 10 so like oh god it's a nothing burger but the market saw this

Ejaaz:
news and were like oh crap china's about to flood the market with euv machines

Ejaaz:
the the cost of all these gpus is gonna go down we're gonna have so many more

Ejaaz:
gpus we should just dump nvidia we should dump amd we should dump all these

Ejaaz:
memory stocks it makes no sense it has a massive overreaction

Josh:
Yeah it seems like we have this baked in trauma. I mean, there's like the,

Josh:
the bear thesis is kind of like the solar panel idea where China famously,

Josh:
they subsidized and then flooded the market with solar panels,

Josh:
completely collapsing prices everywhere.

Josh:
And because China is able to manufacture things at scale, they're able to kind

Josh:
of compete at a margin that other companies cannot. And the Chinese government

Josh:
is willing to back these companies and subsidize those companies in order to

Josh:
destroy the demand in other marketplaces.

Josh:
It's how China has always won. They've used their manufacturing capability and

Josh:
that connection with the government to subsidize these things to reach low prices

Josh:
that other companies cannot compete with.

Josh:
This is not the case for solar. This is just not really true. And it's, it's like,

Josh:
solar is this static technology it is this commodified thing whereas memory

Josh:
is very dynamic there's many different types of dynamic memory there's many

Josh:
different ways of making it there's very

Josh:
many different like custom architectures for it and that's just not really how

Josh:
it works you can't build a memory company to subsidize the prices of

Josh:
and and lower the cost relative to all the others because one the demand is

Josh:
so high and two there's so many different types i mean dram is kind of like

Josh:
tap water that's kind of what they're going for hbm is that premium bottled

Josh:
stuff. That's like that blue glass bottle that you see all the time.

Josh:
They're totally different things.

Josh:
And yet the market is reacting to this news as if they are the same.

Josh:
And I think that disconnect is probably where we feel a little optimistic and

Josh:
feel like perhaps this is a little bit oversold.

Josh:
Now, maybe from here, we get into the kind of unbundling of this thing and talking

Josh:
about where the money is going, because it's not just leaving the system.

Josh:
It is kind of shifting places.

Josh:
There is this unbundling of the AI trade happening.

Josh:
Maybe we could shed some light onto So kind of where that's headed to now.

Ejaaz:
The relative way to think about where the money is going right now in AI is,

Ejaaz:
it's going from the hyperscalers. It's going from the top AI labs,

Ejaaz:
such as Anthropic, OpenAI, Google, Meta.

Ejaaz:
They're spending copious amounts of money. I think the figure for this year

Ejaaz:
is something crazy like, what was it, like $250 billion or something like this on AI CapEx alone.

Josh:
Unbelievable amount.

Ejaaz:
Well, Google just recently reported their quarterly earnings.

Josh:
I think it's more than that.

Ejaaz:
Yeah, I think it might be more than that. It feels low when I said it. But Google's

Ejaaz:
Quarterly earnings reported that they've, for the first time since they IPO'd,

Ejaaz:
so 21 years, I believe, they've gone negative cash flow, which means they're

Ejaaz:
spending more money than they are taking in. The balances have been depleted, right?

Ejaaz:
And the craziest part about this is they're doubling down even more because

Ejaaz:
they see the opportunity. Now, think about it. Google's doing this.

Ejaaz:
Amazon's doing this. Meta's doing this.

Ejaaz:
These guys aren't stupid people. Like, they will only be doing this if they

Ejaaz:
see that there's real revenue coming through.

Ejaaz:
Amazon CEO, Andy Jassy, famously said this in his previous quarter.

Ejaaz:
He said, we are investing all this money because we are literally getting revenue

Ejaaz:
back from it almost immediately or six-month delay. So it makes sense for us

Ejaaz:
to just keep compounding this, right?

Ejaaz:
So the money is going from these companies into these semiconductor companies.

Ejaaz:
And that's what we're seeing. That's why SK Hynix had a record quarter where

Ejaaz:
they made the most money that they ever had, more than they did in 2025.

Ejaaz:
So the unboggling is this free cash flow going from the hyperscalers to the

Ejaaz:
semiconductor companies. So if you wanted to look at a layer to potentially

Ejaaz:
consider investing in or being focused on, it still is, as boring as the answer

Ejaaz:
is, semiconductors in general.

Ejaaz:
The other thing that I think is playing into this, Josh, not to bring up China

Ejaaz:
again, but like we have to because they've been so relevant this week, is open source.

Ejaaz:
A big critique from people right now is, huh, if I have an open source model

Ejaaz:
that I can run at home and is cheaper to run, why on earth would I need to be

Ejaaz:
spending millions and millions of dollars a year on AI? Why do I need all these GPUs?

Ejaaz:
Well, that is fundamentally wrong. And Gavin Baker actually did a really good

Ejaaz:
job explaining this, where he basically said,

Ejaaz:
Number one, these models, these open source models aren't cheap to run at home.

Ejaaz:
If you look at Kimi K3, it costs like between 1.1 to 1.2 million dollars to

Ejaaz:
run effectively at scale.

Ejaaz:
So like it's not available to the average consumer.

Josh:
Not getting that on your home PC. Not at all.

Ejaaz:
Number two, and this is a really good point. He said the hyperscalers or the

Ejaaz:
cloud service providers like Google, like Microsoft, like Meta,

Ejaaz:
like Elon Musk's SpaceX now, which is lending compute to Anthropic at 1.2 billion dollars a month.

Ejaaz:
They locked in really cheap contracts. those contracts expire at the end of the year.

Ejaaz:
What do you think they're going to do after those contracts expire?

Ejaaz:
They're going to re-rate it like 2x. And he makes the point here that like the

Ejaaz:
spot prices for GPU rentals have not slowed down.

Ejaaz:
They're 2x higher than the contracted rates that they were at the start of their contracts.

Ejaaz:
So the point is, whether you have an old GPU, whether you have new GPUs,

Ejaaz:
whether NVIDIA releases Vero Rubin in abundance, these GPUs are in such over-demand

Ejaaz:
that the prices for these things still go up.

Ejaaz:
So every fundamental building block for this unbundling, Josh,

Ejaaz:
is just money going to semiconductor stocks and semiconductor companies.

Ejaaz:
And I don't see any other way out of it right now. That's what it looks like.

Josh:
Yeah. And as we talk about the GPUs, I mean, we just had that fun visual on

Josh:
screen here, which shows you the anatomy of these chips and how nearly 50% of

Josh:
the costs are associated with this high bandwidth memory and everything else takes up for 50%.

Josh:
So the most important object in the world right now is the GPU.

Josh:
The most critical component of the GPU, which accounts for about half of the cost, is this memory.

Josh:
So it's like, okay, well, we have a seemingly infinite demand for GPUs,

Josh:
therefore infinite demand for memory, therefore...

Josh:
Infinite demand for all of the supply of all of these companies like when they

Josh:
get re-rated it should go up,

Josh:
right like that math just seems like it checks out so that's it feels like a

Josh:
little confusing as to why this is happening again there's a lot of external

Josh:
factors there's a lot of kind of overreactions baked in but it seems like

Josh:
as we're just looking at this like kind of pragmatically all of these numbers

Josh:
are checking out also it's insane as i'm looking at this that

Josh:
nvidia sells these chips for forty thousand dollars at an 84 percent gross margin

Josh:
like oh my god good for you man good for you

Josh:
but there is this interesting like inverted capex thing happening where traditionally

Josh:
in technology for the last two three decades all of the funds have gone from the bottom up

Josh:
so it's been from the consumers from the enterprise paying into these huge margin

Josh:
companies like nvidia to raise their profit margins and for the first time we're

Josh:
having the reverse effect where all of the.

Josh:
Companies that have collected all this money over time like google are now spending

Josh:
it for the first time ever in its history faster than it has made it and the

Josh:
downstream effects of that seem to be pretty huge and i mean we have lisa sue she's here

Josh:
reading um yahoo finance actually who is just sharing the idea that ai adoption

Josh:
is faster than any of us thought and there is no end in sight at least from

Josh:
what we can see of where the demand for tokens is going to stop where the demand

Josh:
for all this compute is going to stop.

Josh:
And as of right now, there's still this like tremendous shortage.

Josh:
If anyone was producing more memory, I think it would just get eaten up right

Josh:
away. And I think that's kind of the conclusion of this episode,

Josh:
generally speaking, is that like, hey, there's no end to the demand curve in sight.

Josh:
And the more GPUs, the more memory, the more power we could apply to all this,

Josh:
the better off everyone's going to be and the more hungry everyone's going to

Josh:
be to generate more tokens. Yeah.

Ejaaz:
And just to be clear, a point that Lisa Sue makes in this clip that we're showing

Ejaaz:
on screen right now is it's not just general AI demand that is causing GPU prices

Ejaaz:
and memory stock prices or memory demand to accelerate.

Ejaaz:
It's also this thing called agentic AI. AI agents in general have exploded over

Ejaaz:
the last couple of months.

Ejaaz:
And guess what these AI agents need to be able to access tools,

Ejaaz:
to do these tools, to orchestrate all the tasks, to run 24-7.

Ejaaz:
You know, you see all these fun viral examples on Twitter where,

Ejaaz:
you know, you set and forget a prompt and you come back and like you have a

Ejaaz:
full triple A game like we saw this week with Cloud Opus 5, it all requires CPUs.

Ejaaz:
CPUs require a lot of memory. So the point is, as AI agents scale,

Ejaaz:
you're going to need more of these fundamental things.

Josh:
That's funny you should say that because speaking of agents,

Josh:
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Josh:
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Josh:
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Josh:
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Josh:
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Josh:
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Josh:
best part obviously it works with cloud code codex cursor all the places that

Josh:
you are actively working um and it's open source ready today available on developers.ledger.com

Josh:
also linked in the description and thank you so much to ledger for supporting

Josh:
this episode now let's close this thing out you jazz we gotta let people know,

Josh:
what do you do with all this information now like okay we've given you kind

Josh:
of this like idea here's what's happening here's

Josh:
the market demands here is the sell-off that's happening we are in a currently

Josh:
in a spot that's worse than 2008 although it doesn't feel like it probably because

Josh:
we speed ran it and because everyone's already up so much,

Josh:
but like what do we do here? What do you do with this information?

Ejaaz:
Okay so here's my grounded take and you know that's Rich coming from the show

Ejaaz:
well we're quite optimistic but I'm going to try and be grounded.

Ejaaz:
The AI hype

Ejaaz:
Definitely drove markets to pretty insane valuations.

Ejaaz:
And I'm not denying that. But what I will say is the future of AI and the economic

Ejaaz:
value that it'll generate is just like the Wild West right now.

Ejaaz:
It is incredibly hard to predict and even conceive. There are many theories

Ejaaz:
out there, many skeptics out there.

Ejaaz:
So the bet you need to make if you're listening to this is, do you believe that

Ejaaz:
AI LLMs, Claude, ChatGPT, that AI agents, that GPUs are going to be in absurd demand going forward?

Ejaaz:
Do you think the demand for AI products, are you using AI more over the last

Ejaaz:
couple of months? Like, you know, answer that question.

Ejaaz:
If you believe that scales out, remember, it's only like something upset,

Ejaaz:
like 5% of the population that's even using AI LLMs beyond just a Google search.

Ejaaz:
If you believe that scales, then you believe and bet that these semiconductor

Ejaaz:
companies that are creating the fundamental materials.

Ejaaz:
You know, we showed this on our screen earlier to build these chips that are

Ejaaz:
required, whether you like it or not to run whatever types of AMLs,

Ejaaz:
whether it's open source or closed source, then you're betting that these companies

Ejaaz:
are going to be more in demand.

Ejaaz:
And you're betting that these profit margins and revenue is going to increasingly growth.

Ejaaz:
And guess what? Those are the fundamental drivers of whether a company's stock

Ejaaz:
prices is going to go up. And I think that the market is completely unjustified right now.

Ejaaz:
And I think we're going to look back on this in a year. I'm making my stake.

Ejaaz:
I'm making my claim. I'm making my prediction.

Ejaaz:
And we're going to think that these stock prices will add absurd valuations.

Josh:
Yeah, well, here's kind of how I think about it too, is like on a personal note,

Josh:
I'm more of an investor than a speculator.

Josh:
And that is why it's very easy to feel constantly optimistic.

Josh:
It's like, I very firmly believe in the idea that we are going to need a lot

Josh:
more tokens, a lot more compute, a lot more energy over a long period of time.

Josh:
How long it takes to get there is unknown, but that doesn't really matter.

Josh:
If you have a low time preference where it doesn't matter if this takes six

Josh:
months or six years or 60 years you just kind of directionally know where it's

Josh:
going to go then making these bets and dealing with the volatility makes things much easier,

Josh:
This directionally feels like a trading opportunity. This is people who are

Josh:
selling off their profit. This is people who are positioning themselves to make a short buck.

Josh:
That doesn't need to actually be the case if you believe in this long-term.

Josh:
And I think that's probably where we can wrap up this episode today.

Josh:
So with that, yeah, thank you all for watching. That's the state of memory.

Josh:
It was crazy sad to find out that we lost more money recently than 2008.

Josh:
And we don't feel like it because clearly we've been printing a lot more dollars

Josh:
and those numbers need to go up a lot higher to feel the same thing.

Josh:
But that is kind of where we stand. there is this discrepancy between memory

Josh:
stock prices and the actual demand for these items and yeah i think that's pretty

Josh:
much it so if you enjoyed the show please don't forget to share it with a friend

Josh:
who might also enjoy rate us

Josh:
on your favorite podcast player leave a comment if we are too optimistic or

Josh:
if we need to dial things back a little bit or

Josh:
or if you disagree in why and what stock you are investing in and choosing to

Josh:
gamble on um each has any closing thoughts while we wrap this up.

Ejaaz:
That is it thank you so much for listening and we will see you on the next one guys