The explosive rise in memory prices has profound impact.
One is in investing and valuation framework – you now have several memory names (like SK Hynix, Micron, SanDisk) that is trading at single-digit or 10x current year P/E with expected high earning growth into the future.
And these companies are large enough to absorb tons of capital.
The indirect impact? Other companies’ valuation now looks absurd!
The previously dirty cheap companies lose investors. For 10x P/E, you can buy memory names with much stronger growth!
If the only reason to long is undervalued, then it becomes harder to justify the buy.
Additionally, those companies with reasonable moat, single digit growth, 20-30x p/e also lose – 2-3x PEG looks absurd now.
This hits many consumer or healthcare names.
No delta, no acceleration in growth = no interest.