Limitless: An AI Podcast

Josh:
Samsung just became the most profitable company in the world,

Josh:
but nobody actually understands what they make.

Josh:
I feel like when I think about Samsung, I think smartphones or computers,

Josh:
but the reality is is that almost 96% of their company's profits come from a

Josh:
single entity and that's memory.

Josh:
And when we think about memory, we've talked about this in the past,

Josh:
there are three main providers.

Josh:
Two of those three just so happen to exist in Korea.

Josh:
So what are two of the most profitable companies doing in the same country and

Josh:
what are they doing to unlock all this value? And then what are the implications

Josh:
of this across the entire market. That's what we're going to get into today

Josh:
on this episode. EJS, what's going on with Samsung?

Josh:
How is this even possible? I feel like Samsung was the company that people buy

Josh:
Android phones from, not the most valuable company, profitable company,

Josh:
I should say, in the world.

Ejaaz:
Yeah, no, I remember as a kid, a bunch of my friends had Samsung phones,

Ejaaz:
and that's all I knew them for. So when I heard the name come up repeatedly

Ejaaz:
over the last year and a half or two years, I was kind of like,

Ejaaz:
okay, what is this company doing different now?

Ejaaz:
Firstly, some of the headline numbers. um samsung recorded their quarterly profit q2

Ejaaz:
at 58.5 billion dollars now this was surprising to many analysts because they were expecting it to be

Ejaaz:
55 so you know they overachieved by around three billion dollars but the larger

Ejaaz:
headline reasoning behind this is they absolutely crushed nvidia who only came

Ejaaz:
in at a measly 53 billion dollars now

Josh:
Obviously my god.

Ejaaz:
It's a crazy chart so so

Ejaaz:
Obviously, I'm jesting, but the point I'm trying to make here is,

Ejaaz:
why has Samsung been able to achieve so much profit?

Ejaaz:
You mentioned earlier that 94% of their profit over the last year and a half

Ejaaz:
has come from one single department in their company, and that is AI memory.

Ejaaz:
Samsung is currently the number

Ejaaz:
two largest provider of something known as HBM, high bandwidth memory.

Ejaaz:
In order to understand why this is such a useful commodity, every single GPU

Ejaaz:
that NVIDIA sells, every single TPU that Google makes, any type of AI chip or

Ejaaz:
AI hardware, quite frankly, requires a ton of memory.

Ejaaz:
And emphasis on the word ton, because typically, consumer devices,

Ejaaz:
your laptop, your computers require just kind of like a standard,

Ejaaz:
pretty predictable amount of memory.

Ejaaz:
But AI memory in particular has been quite exponential. Sure.

Ejaaz:
So Samsung is one of three major providers.

Ejaaz:
And because they own a relative monopoly on this industry, they've been able

Ejaaz:
to hike prices up massively. Now,

Ejaaz:
I know I'm throwing out big numbers here, but to help you understand why this

Ejaaz:
is such a gargantuan amount of money to make over three months,

Ejaaz:
we're roughly talking about $650 million per day or $27 million per hour.

Ejaaz:
So this is more money than the most valuable company in the world makes,

Ejaaz:
yet Samsung isn't the most valuable company in the world.

Ejaaz:
And in Korea, right next to it in the number two position is SK Hynix,

Ejaaz:
which is relatively their sister company, or not their sister company,

Ejaaz:
but their sister company in terms of memory, who is the number one AI memory provider.

Ejaaz:
So there's some really unique moats being formed in Korea.

Ejaaz:
And it's weird because typically in the West, you largely have the monopolies

Ejaaz:
intact. And now we're seeing it in Asia, specifically Korea.

Josh:
Another fun fact is if you actually scroll up to the top of this artifact,

Josh:
we distilled it down to seconds.

Josh:
That's $7,500 per second that this company makes, which is remarkable because

Josh:
going back down to that other chart, I mean, we see the little bar on the bottom

Josh:
here that shows Samsung Q2 2025 at $3.4 billion.

Josh:
For those of you who are a little confused about years, 2025 was last year.

Josh:
That was a year ago, they were making $3.4 billion, and now they've surpassed

Josh:
NVIDIA at $58.5. So what on earth is going on? What is going on with this memory?

Josh:
And I think the essence is, like you mentioned, EJ, every computer needs two

Josh:
things. It needs the workbench, which is the memory, and then it needs the filing

Josh:
cabinet, which is the And there's only three companies that make virtually all of this.

Josh:
Each company kind of has their specialty,

Josh:
There's DRAM first, which we commonly reference as the workbench.

Josh:
It's the RAM inside of your gaming PC. So if you've ever built a gaming PC or

Josh:
if you've ever been on Newegg shopping around, you'll recognize this term called DDR5.

Josh:
That's the fast memory. That's the temporary RAM, a lot of people call it.

Josh:
And it gets wiped when you turn off your computer. Then there's NAND,

Josh:
which is more closer to like the filing cabinet. It's your SSD.

Josh:
So if you have an iPhone, chances are you have NAND flash inside of your iPhone.

Josh:
That is a little bit slower, but much cheaper per gigabyte.

Josh:
And then there's HBM, high bandwidth memory, which is the AI stuff.

Josh:
And that's the reason for everything taking place right now.

Josh:
And those DRAM chips, we've described this before, they're basically stacked

Josh:
up and they're 12 to 16 stories high, kind of like a skyscraper of memory.

Josh:
And it uses this incredibly complicated thing.

Josh:
Now, SK Hynix, one of these two companies we've mentioned, they own about 60%

Josh:
of the entire HBM market.

Josh:
So any AI chip that gets built, chances are it's gone through them.

Josh:
And that's why so much of this monopoly has started to form.

Josh:
And that's why so much of these profit margins has begun to expand is because

Josh:
there are three companies in charge of this bottleneck that controls the entirety

Josh:
of the AI market. And you could see here kind of a visual of what this looks

Josh:
like. DRAM next to NAND, next to HBM.

Josh:
And Samsung and SK INIX in particular just so happen to both be the Korean superstars

Josh:
that are making this this reality possible right now.

Ejaaz:
If there's a single sentence that I think would describe why...

Ejaaz:
I guess people are so bullish on these companies. AI is basically a black hole

Ejaaz:
for memory in general, more so than any other consumer or enterprise tech wave that we've seen before.

Ejaaz:
So to give you an idea, when you write a prompt and you submit that,

Ejaaz:
every single AI model, ChatGPT, Claude, doesn't matter, references or rereads

Ejaaz:
the entire model weights.

Ejaaz:
Now, the model weights are what these companies are spending billions and billions

Ejaaz:
of dollars to build, to build a better intelligent model.

Ejaaz:
It rereads it every single time. So you need a lot of memory.

Ejaaz:
And every model, by the way, kind of 10 to 20 X is the requirement of memory

Ejaaz:
needed to build that model. Now, at the scale that they're building these models,

Ejaaz:
15 trillion parameter models, 20 trillion parameter models, whatever that might

Ejaaz:
be, that is going to keep going up. So there's a black hole for memory there.

Ejaaz:
The craziest part is that's not even the largest part.

Ejaaz:
When you talk to your chatbot, when it remembers things about you,

Ejaaz:
when you ask it to remind yourself of the thing that you spoke about in a different

Ejaaz:
conversation, that's all temporary storage, which is on the NAND flash side of things.

Ejaaz:
And that is equally important. So the overall effect of this is more memory

Ejaaz:
required from all three of these companies that were, well, these two companies,

Ejaaz:
mainly Samsung and SK Hynix, but also from the likes of Micron in the US.

Ejaaz:
And that's why it is pretty crazy to say that memory is no longer a commodity.

Ejaaz:
And I think this is an important point because typically, or critics will point

Ejaaz:
out, an AI memory bubble is a bubble and it will eventually pop.

Ejaaz:
And the reason why they're saying that is justified on historical facts,

Ejaaz:
which is AI memory has gone in boom and bust cycles constantly over the last couple of decades.

Ejaaz:
In fact, three years ago, SK Hynix was doing so badly that they almost got bought

Ejaaz:
by, Josh, can you guess the company?

Josh:
No, don't tell me, Sam, Sam.

Josh:
Micron. Oh, my God. Imagine Micron owned SK Hynix.

Ejaaz:
They came this close because it was the pico bottom of the memory cycle.

Ejaaz:
They couldn't sell memory. They had overinvested in this thing called high bandwidth

Ejaaz:
memory, and they never knew if they were going to sell enough units.

Ejaaz:
And Micron almost purchased them. But they doubled down, and they didn't sell.

Ejaaz:
And now they, as of this week, were the number one most valuable company in

Ejaaz:
Korea. But Samsung eclipsed them with their recent profit earnings. It's pretty insane.

Josh:
That's unbelievable. And there's this really crazy thing. If you go down back

Josh:
to the visualization right underneath that, we have the wafer math of how this

Josh:
actually works because HBM is the AI memory. You need HBM.

Josh:
And it's really demanding and it actually destroys a lot of other consumption

Josh:
ability because according to this, one gigabyte of HBM consumes the factory

Josh:
capacity of roughly four gigabytes of regular DRAM.

Josh:
So every wafer that becomes AI memory is a wafer that never becomes laptop or phone memory.

Josh:
And that's why we're starting to see prices from a lot of these consumer-grade

Josh:
products going up. Like for the first time ever, Apple just increased their

Josh:
products across the board on the laptops, probably on the iPhone this year.

Josh:
Why does that happen? It's because HBM is consuming four times the amount of

Josh:
memory consumption per gigabyte than traditional memory otherwise would.

Josh:
And as a result, this creates pretty hefty margins.

Josh:
And we have this pretty cool chart to reflect just how good these margins are,

Josh:
because again, when you have a monopoly, you set the pricing,

Josh:
you determine how much money you actually stand to make.

Josh:
And we have it compared relative to other industries. So in a grocery store,

Josh:
for every $100 of chips sold, they...

Josh:
Collect about three of that as profit. Very slim margin on the grocery stores.

Josh:
CarMaker is a little bit better at $7.

Josh:
Apple, which is the traditional tech margin when you sell hardware, is about 30%.

Josh:
Samsung is 52 and SK Hynix is 72, meaning $72 of every $100 sold goes to their top line.

Josh:
It goes right to the balance sheet they're able to use and spend that on R&D

Josh:
and profit. So they have this tremendous amounts of profit margins that they're able to play with.

Josh:
And I think that's what's making them clearly so profitable.

Josh:
And Samsung's memory workers are getting bonuses now worth six times their annual

Josh:
salary, which is really incredible to see. EJ, as we were talking about this before the show, how...

Josh:
Generally speaking, Koreans like to gamble a little bit more than the average person.

Josh:
And if you are a Korean who is interested in gambling and also interested in

Josh:
just making a tremendous amount of money, if you either bet on SK Hynix or you

Josh:
start working at SK Hynix, you either got a six times multiple on your investment

Josh:
or a six times multiple on your salary as a bonus.

Josh:
And this just seems like this unbelievable gift to the country of Korea. Oh my gosh.

Ejaaz:
Here's a fun fact. The luxury sales market has tripled over the last four months

Ejaaz:
in Korea specifically because everyone's getting rich off of SK Hynix.

Ejaaz:
I saw a story about folks over in Taiwan who are borrowing up to $60,000 from

Ejaaz:
their bank at crazy interest rates just to buy TSMC.

Ejaaz:
The point is, there are crazy things happening in the AI markets in Asia specifically,

Ejaaz:
and Korea is no different.

Ejaaz:
It's interesting you raise the point around margins. I was looking at the price

Ejaaz:
increase or the cost of memory that SK Hynix and Samsung have been selling over the last six months.

Ejaaz:
Now, in Q1, they hiked their prices up 90%.

Ejaaz:
Just imagine that for a second. Just consider that. Imagine buying something

Ejaaz:
that you use regularly in your phone, in your computer, and suddenly the price

Ejaaz:
of it doubles purely because one component of your device has gone up almost 100%.

Ejaaz:
But it gets worse. In Q2, it went up a further 50% to 60%. That's why Samsung

Ejaaz:
just reported the best earnings ever, 19x better than last year.

Ejaaz:
And more money, by the way, than they've made in the last 40 years.

Ejaaz:
They've made in one single year. So the point I'm trying to make is...

Ejaaz:
These prices have been hiked up pretty aggressively.

Ejaaz:
And so your question might be, well, it's not going to go up any higher.

Ejaaz:
Well, Samsung announced or are going to announce in their quarterly earnings

Ejaaz:
that they're going to hike it up another 20% in Q3. So the point is simple.

Ejaaz:
Memory is extremely scarce.

Ejaaz:
There are three companies in the world that can produce this memory that is required for AI.

Ejaaz:
Two-thirds of them reside in Korea. And Samsung and SK Inux hold a monopoly

Ejaaz:
for something called high bandwidth memory specifically, and they can price it however way you want.

Ejaaz:
Now, you may look at me and listen to this and say, well, why can't we just

Ejaaz:
create more memory? Why can't there be other companies that do this?

Ejaaz:
It is a very closely customized process.

Ejaaz:
These companies, SK Hynix, the CEO of SK Hynix, hangs out with Jensen almost

Ejaaz:
every other month or every other two weeks, actually, to try and figure out

Ejaaz:
how best to create memory for the chips that they're building.

Ejaaz:
All these other hyperscalers are doing the exact same thing.

Ejaaz:
They're begging. Remember, there was a story we spoke about a few months ago,

Ejaaz:
Josh, where Google and Microsoft had flown their execs over to Korea to convince

Ejaaz:
them to sell them more capacity.

Ejaaz:
They even offered to pay a couple hundred millions of dollars to pay for their

Ejaaz:
equipment that is required to expand their fabs.

Ejaaz:
It is absolutely insane what's going on. And you're right as a skeptic,

Ejaaz:
if you're listening to this and you are a skeptic, to think, you know what?

Ejaaz:
This is a bubble, it's going to pop soon. But also, if you look at the fundamentals,

Ejaaz:
like companies such as Micron and SK Hynix, the PE ratios are still astoundingly

Ejaaz:
low because they don't have enough supply. Atoms can't get moved.

Josh:
So hearing this price increase, it kind of makes me happy for you,

Josh:
happy for the investors, glad everyone's making money.

Josh:
But I think about the impact that it has on my life and the actual consumer

Josh:
because this is starting to trickle down into the real market and it is affecting

Josh:
me in a way that is pretty annoying.

Josh:
When we look at the price comparisons of what things cost today as a consumer

Josh:
because of this demand crunch, the numbers are pretty brutal.

Josh:
Just to get a 32 gigabyte kit of RAM, which is traditionally not that expensive

Josh:
in a small component in a computer, it's two to three times more expensive this

Josh:
year than it was last year.

Josh:
And now if you want to build a PC, over a third of the cost of that computer is just the memory.

Josh:
And the same thing is true with a lot of Apple products, like we mentioned.

Josh:
The MacBook Air now has increased $200. It went from $1,100 to $1,300.

Josh:
The MacBook Pro, even more.

Josh:
If you bought a MacBook Pro just a couple weeks ago, it was $1,700.

Josh:
And that same MacBook Pro today is now $2,000. client.

Josh:
Same with MacStudio, which has increased $1,300 because why do people buy MacStudios?

Josh:
Well, they buy them to run local inference on their machines.

Josh:
They have a tremendous amount of memory.

Josh:
That memory is costing a lot more. Now it went from $4,000 to $5,300.

Josh:
And the same with their low-cost MacBook Neo, increasing $100.

Josh:
So the price of everything is continuing to.

Josh:
There's probably some pretty strong forces that be to convince you to maybe

Josh:
keep your phone for another quarter or two or another year or two or another

Josh:
cycle because these prices are just going up, up, up.

Josh:
Now, the question I have for you, E-Jazz, is, is this going to continue and

Josh:
how long will this continue? Can they afford to just continue to move these

Josh:
prices up and up and up and just expect everyone else to absorb that price?

Josh:
Or is there a moment where they're going to have to start cutting those margins

Josh:
a little bit because the market's just fully tapped out? They cannot afford

Josh:
to continue to spend this high on memory.

Ejaaz:
There are many different ways to analyze this. There are frameworks.

Ejaaz:
There are Wall Street traders that are like spending hours and hours trying

Ejaaz:
to research this and figure out, hmm, will this memory demand keep going up?

Ejaaz:
There's only one proxy that measures that.

Ejaaz:
Are more people using AI?

Ejaaz:
What does that curve look like? If you believe, as you're listening to this,

Ejaaz:
that more people will be using AI, spinning up multiple AI agents per person

Ejaaz:
and increasingly use it across work, leisure, and whatever they do in their day-to-day life,

Ejaaz:
then you are betting that memory demand increases exponentially.

Ejaaz:
But then you might be wondering, well, what if they produce enough supply to

Ejaaz:
meet that demand over the next year?

Ejaaz:
Well, number one, you're not going to get that supply coming on board until

Ejaaz:
2030. These chip fabs take so long to build.

Ejaaz:
They are meticulously designed, and they are hard to flood the supply right now.

Ejaaz:
Now, typically in a boom and bust cycle, you could overflood the supply because

Ejaaz:
you can only make so many mobile phones.

Ejaaz:
Apple and Samsung, ironically, were the ones making these mobile phones.

Ejaaz:
So you can kind of predict the consumer hardware, you can't do that in the GPU

Ejaaz:
game because so many people want that.

Ejaaz:
So it depends on if that demand outpaces the supply of memory.

Ejaaz:
And right now it's looking like it's three to five X over the next couple of

Ejaaz:
years over the actual supply. So technically we're gonna be constrained.

Ejaaz:
The other perspective I have on this is we will look for alternatives in terms

Ejaaz:
of memory suppliers in China. And Apple's been doing this. They're shopping

Ejaaz:
around this company called CXMT in China.

Ejaaz:
That produces similar DRAM and HBM. But here's the sticker.

Ejaaz:
They're oversold to the Chinese AI labs, and they also don't have any supply.

Ejaaz:
So Apple is trying to strong arm them and the US government to allow them to

Ejaaz:
buy from a competitor in China.

Ejaaz:
And the final point is, what if we create a new model architecture that doesn't

Ejaaz:
require as much memory? Now, the skeptic will jump at that, and they'll say,

Ejaaz:
hey, memory demand is going to crash. Prices are going to crash.

Ejaaz:
Like this is the bubble popping. I would argue the opposite.

Ejaaz:
If memory becomes cheaper, guess what?

Ejaaz:
More use cases get unlocked, more AI agents get run, and the world economically

Ejaaz:
becomes way more productive. So does that sound bullish to you?

Ejaaz:
Yeah, I guess so. I'm a permable on the memory zone.

Josh:
Yeah, we've been so bullish. And for a good reason, like Micron's up,

Josh:
what, two and a half times a year today.

Ejaaz:
Dude, we made the call at the end of last year. It's up 150%.

Josh:
We've been on it. I will say the Illuminous portfolio has been doing absolutely

Josh:
incredible over the last 12 months. Like everything that we have predicted to

Josh:
varying degrees has done pretty well.

Josh:
But now I have to ask the question. And it's like, okay, SanDisk up six and

Josh:
a half times, Micron up two and a half times, SK Hynix two and a half times,

Josh:
Samsung 1.5 multiple year to day.

Josh:
All these companies have done incredibly well, but just recently,

Josh:
all of those companies are down more than 20% from their recent highs in the stock market.

Josh:
Which, if we're speaking technically, that is a bear market.

Josh:
So we're technically in a memory bear market right now, which doesn't feel like

Josh:
it based on what we're talking about.

Josh:
And the weird paradox here is that like Samsung just announced their earnings

Josh:
earlier this week and in fact they beat estimates which was unbelievable they

Josh:
had this record earnings report that's how we found out that they're more profitable

Josh:
than nvidia and yet the stock sold off.

Josh:
Nine percent in a single session and sk hynix fell off 15 in a single session

Josh:
so these stocks got crushed and there's this interesting thing at play where

Josh:
like okay these memory companies are saying that they have record earnings they're

Josh:
going to continue to increase prices they have

Josh:
increased amount of sales coming down the pipeline they're going to fulfill

Josh:
all this demand and yet the market is saying, whoa, we got to slow down.

Josh:
We are taking this down 20%. Now, there are some things that may have smoothed the market here.

Josh:
Meta has hinted at capping their AI capex, not that they've built anything fun

Josh:
with it anyway, but they've kind of hinted that they want to lower the capex.

Josh:
And I guess that's where we're sitting now is that this weird point of uncertainty

Josh:
where the company is just saying, hey, guys, we're all good on this end.

Josh:
We have incredible margins. We have an incredible business. There's tremendous amount of demand.

Josh:
But the stock market's saying, whoa, hold on there. We've gotten up a lot.

Josh:
We might have to check you. There's some unknown unknowns that are coming down

Josh:
the pipe that they're not entirely sure about.

Ejaaz:
Can I give you my honest and boring take as to why the markets are crashing?

Josh:
Tell me, why are we down 20% right now?

Ejaaz:
We just came to the end of pretty much quarterly earnings.

Ejaaz:
And this is just a sell the news event. I think there are a lot of funds around

Ejaaz:
the world that are levered up on these stocks, and they kind of want to get in at a better price.

Ejaaz:
Now, if you're listening to this

Ejaaz:
and you're thinking, Ejaz, you sound delusional, fair play. Maybe I am.

Ejaaz:
But I think that if you're any kind of a long-term investor in AI,

Ejaaz:
it is so strikingly obvious that we're going to need memory.

Ejaaz:
And if you've done any kind of in-depth research around how to produce that

Ejaaz:
memory, you're going to need these three companies, right?

Ejaaz:
That's the way that it sits right now. And I think people are getting concerned.

Ejaaz:
People are getting worried. They're wondering how on earth can we make this

Ejaaz:
much money over the same stocks month after month after month?

Ejaaz:
How can the profit margins can't keep going up, but they kind of can keep going

Ejaaz:
up as long as memory supply is underpriced or underpaced for AI demand.

Ejaaz:
And that's currently what we're saying before. And we've never seen this before.

Ejaaz:
That's the whole point. Like these companies are more in demand than they have ever been.

Ejaaz:
Now, a fun fact is like with every cycle, there is a boom and a bust and eventually

Ejaaz:
there will be a bust, I believe.

Ejaaz:
But that's only at a point where these fabs start oversupplying the entire market.

Ejaaz:
And at the last pico bottom, when memory was super cheap, do you guys want to

Ejaaz:
guess which company or companies were aggressively pushing their prices even

Ejaaz:
lower to buy as much memory as they can?

Ejaaz:
Oh, who's that? When the shoe was on the other foot. It was Apple.

Ejaaz:
It was Apple. Apple had the monopoly on SK Hynix and Samsung and forced them

Ejaaz:
to sell DRAM and HBM for the cheapest prices possible.

Ejaaz:
So the point I'm trying to make is this might seem super aggressive.

Ejaaz:
Samsung, SK Hynix, hiking up prices.

Ejaaz:
They're just doing what other companies did in a capital efficient market.

Ejaaz:
And that's what we're seeing right now. I think this will be a nothing burger

Ejaaz:
in a couple of months time. That's my bet.

Josh:
Yeah. And you have to imagine like there probably is some scar tissue.

Josh:
Like you mentioned, we have never seen this before in terms of demand,

Josh:
but we have seen this before in terms of price, where these

Josh:
kind of memory super cycles do happen, the last one being in 2017 to 2018,

Josh:
where Micron peaked at about four to five times price to earnings ratio,

Josh:
and then proceeded to fall 60% while their earnings were still rising,

Josh:
similar to what we have now.

Josh:
So I think people are just a little concerned, a little scared.

Josh:
This is probably a short-term outlook, longer term, like you mentioned,

Josh:
things are looking pretty solid.

Josh:
In fact, coming up, we have a test of this, and a pretty big one,

Josh:
because SK Hynix, as we mentioned earlier, is a Korean company, but not for long.

Josh:
On July 10th, they're being listed on the NASDAQ under the ticker SKNY,

Josh:
raising about $30 billion.

Josh:
So this feels like a really pivotal moment in the memory world of how the American

Josh:
market is going to perceive SK Hynix bringing their listing onshore.

Josh:
And we're gonna see kind of how the market reacts. And this is an interesting

Josh:
one. Ejaz, I'm curious for your take. Like, is this something you're planning

Josh:
to participate in and invest in? Like, we have a sneaky IPO here.

Ejaaz:
Yeah. In short, yes. I'm bullish on memory. I own Micron.

Ejaaz:
I own DRAM, which is kind of like a basket that owns each of these top memory

Ejaaz:
companies individually. Like, if you're a US citizen, you can't necessarily

Ejaaz:
get access to SK Hynix or Korean stocks in general.

Ejaaz:
But you can do it through these kind of like basket things. DRAM is one.

Ejaaz:
But yeah, I'll be buying SK Hynix when they do IPO here in the US.

Ejaaz:
As I've been waiting for it. Fun fact.

Ejaaz:
Guess where I think $2 to $3 billion of this $28 billion ADR is coming from?

Josh:
Leopold Ashenbrenner. That guy's back at it again.

Josh:
This dude does not miss. Our last episode which we recorded on him,

Josh:
which you should go look at. It has like 120,000 views now on YouTube.

Josh:
It talks about how his portfolio made no sense. He's like, why are you shorting

Josh:
NVIDIA as your largest position? Well, it turns out NVIDIA is down 20% since

Josh:
recording that. Who would have thought?

Josh:
And now he is participating in SK Hynix as the IPO, as one of the largest seed

Josh:
investors in this entire thing. So, like, the dude is on it.

Josh:
I mean, as much as people push back against his decisions, he has really not missed.

Josh:
He's killed it. Yeah, he's done such an amazing job.

Ejaaz:
Yeah, he has one of the, his ears are closest to the ground in terms of what

Ejaaz:
is actually going on in the Frontier AI Labs.

Ejaaz:
And it's so funny because you know some might say there's some questionable

Ejaaz:
practices going on but I remember

Ejaaz:
I think a few a month ago he announced major investments through his fund in

Ejaaz:
some of these Australian neoclouds and then they signed a major partnership

Ejaaz:
with some of the Frontier LAP so if you are blindly kind of like following this

Ejaaz:
guy I would urge you to be careful but it's promising

Ejaaz:
a question you asked earlier is we're gonna see this as a real test in the market

Ejaaz:
in in the West at least as to whether the memory trade is over or whether it is in demand.

Ejaaz:
This round, this SK Hynix IPO, which is launching in a day's time,

Ejaaz:
if you're listening to this right now, is currently rumored to be 4x oversubscribed.

Ejaaz:
There is insatiable amount of demand for memory stocks in general,

Ejaaz:
and that comes from capital institutions, but it also comes from retail as well.

Ejaaz:
But you can't get that amount of money without having institutionals that have

Ejaaz:
thought long and hard about this, pension funds, etc., that are buying this

Ejaaz:
and holding for a while in play.

Ejaaz:
So that's what we're seeing right now, and I think that this is going to be

Ejaaz:
a pretty huge success. I think these stock declines over the last couple of

Ejaaz:
days is a nothing burger. I think it's just a new quarterly earnings and hedge

Ejaaz:
funds are doing their thing, they're trading their outgoes.

Josh:
Yeah, that's probably right. And if we go back to the artifact,

Josh:
there's a super cycle or sell signal, which I think is probably a decent place

Josh:
to wrap up this episode in deciding like, hey, where is everything going here?

Josh:
And I think the reality that we've kind of converged on, I would say between

Josh:
the two of us, let me know if I'm wrong, is that longer term.

Josh:
Things are looking great. There is no limit to the amount of memory demand that's happening.

Josh:
There are a very small subset of companies that are capable of building this

Josh:
type of memory, and there is not a very clear path for new entrants to actually

Josh:
come and make a meaningful impact on their business.

Josh:
So as long as this demand continues to rise, which we assume it will due to

Josh:
just the sheer demand volume of AI and tokens, that is looking good.

Josh:
On the short term, people are a little bit afraid. They're a little unsure and

Josh:
uncertain because there's been such a large run-up and because there's probably

Josh:
some scar tissue from these previous boom and bust cycles when it comes to the memory companies.

Josh:
So there is a lot of uncertainty, but this makes sense to me.

Josh:
And we've seen this over and over again in the market where there are a lot

Josh:
of knee-jerk reactions that are incorrect and over-determined.

Josh:
And the reality is that if you have a slightly longer time frame,

Josh:
a slightly longer time scale, then you can be right eventually.

Josh:
And perhaps you're not right in the next month or two if you bought it a month

Josh:
ago you're looking pretty dumb right now you're probably feeling like oh man

Josh:
i bought the wrong company but i think the reality is is that six months 12

Josh:
months 18 months 24 months in the future

Josh:
um these things are still going to continue to be pretty strong businesses and

Josh:
i think that's probably the reality we could leave it at.

Ejaaz:
I agree. I'm curious what the folks listening to this think.

Ejaaz:
I know AI memory isn't the sexist of topics to talk about, but it has increasingly

Ejaaz:
become the most important component to this AI infrastructure capex spend race.

Ejaaz:
It is the most costliest and priciest item that is driving up all the prices of your consumer goods.

Ejaaz:
What are your thoughts? Do you think we are overly optimistic?

Ejaaz:
Do you think that memory profit margins are going to keep going up?

Ejaaz:
Do you think memory stock prices are going to keep going up?

Ejaaz:
Or do you think this is an insatiable bubble that is eventually going to burst

Ejaaz:
and we are all currently delusional and Josh and Ijaz are marking the top?

Ejaaz:
Curious to hear from you guys on what you think.

Ejaaz:
Thank you so much for listening to this episode. We are trying to cover different

Ejaaz:
types of companies that just aren't based in the West and also kind of explain

Ejaaz:
how and why they're important and how you guys can maybe potentially get exposure

Ejaaz:
if you were interested in doing so.

Ejaaz:
We're always excited about talking about these topics, but if there's anything

Ejaaz:
that we've missed recently and you want to hear more about, let us know.

Ejaaz:
We've noticed that a lot of Capital Markets episodes that we've been making

Ejaaz:
have been super interesting and engaging by you guys. We love the comments.

Ejaaz:
Wherever you're listening to us, Spotify, YouTube, Apple, let us know what your

Ejaaz:
thoughts are. Give us a rating. Give us a thumbs up and tell your friends about it as well.

Ejaaz:
And I think the final thing to say is Limitless is in the market for partners

Ejaaz:
that we want to team up with.

Ejaaz:
And we want to talk about your product and your feature. If there's something

Ejaaz:
that might be interesting that you think Josh and Nijaz might like,

Ejaaz:
or if you know of someone that has something that they might want to publicize, let us know.

Ejaaz:
We are in the market. We have hundreds and hundreds and hundreds of thousands

Ejaaz:
of people every single month that listen to us.

Ejaaz:
And we would love to promote and talk about your product. But aside from that, I think that's it.

Josh:
Yeah, it's almost like you've had 200 episodes of practice on that sign-off.

Josh:
That was pretty good. No notes, no additions. Thank you all for watching as always.

Josh:
Very much appreciated. Share with a friend if you think they would enjoy.

Josh:
And as always, we will see you guys in the next episode. Next one is the roundup.

Josh:
We got a big week coming for the roundup. My God, we have a couple of new models

Josh:
coming down the pipe. We got it. Yeah.

Josh:
Just a couple. Yeah, just a good one. It's a good one. You're going to want

Josh:
to tune in. That's dropping on Friday. We got a newsletter coming out as well.

Josh:
And we'll see you guys on that episode. Thank you so much for watching.

Ejaaz:
See you guys. Peace.