Cathie Wood of ARK Invest explains her decision to avoid investing in HBM suppliers like SK Hynix and Micron, citing the cyclical and commoditized nature of memory and the potential for technological innovation to engineer around supply constraints. This stance suggests a bearish outlook on the long-term pricing power of these memory manufacturers despite current AI-driven demand.
Cathie Wood's ARK Invest is actively avoiding investments in HBM suppliers SK Hynix and Micron, despite the current AI-driven demand for their products. Her rationale is rooted in the historical cyclicality and commoditization of the memory sector, drawing an analogy to Tesla engineering out cobalt from its batteries to overcome supply constraints. This implies a belief that technological innovation, particularly in AI inference architectures (like those from Cerebras and Groq), will reduce the long-term reliance on expensive HBM, thereby eroding the pricing power of current suppliers. This presents a short-term risk for SK Hynix and Micron as a prominent investor expresses skepticism, while offering a long-term opportunity for companies developing alternative AI memory solutions.