The market's mood shifted last week; investors started selling the rallies. Samsung delivered a record quarter, operating profit up roughly nineteenfold, yet the shares fell more than -10%. When best-ever numbers are met with selling, the good news is already in the price. The word on the street is that the memory shortage will not last forever, with industry forecasts pointing to oversupply as early as 2028.
But the more interesting move was where the attention went next. Chinese internet names posted their biggest single-day jump since last September, pulling peers across the complex higher. The mistake investors keep making is conflating China the economy with China the equity market. The structural problems in property, demographics and debt are real, but the market had already discounted an enormous amount of that while policy turned steadily more supportive, leaving valuations near a 25-year relative low against global peers. Last week, prices finally began to catch up.
And then there are the dips worth watching. Two European semiconductor names on the watchlist pulled back in sympathy with the memory sell-off, yet they sit at the opposite end of the cycle. One makes the power and analog chips that serve as the nervous system of physical machines, the silicon that carries the signal and pushes the current rather than doing the thinking. The other sits in the wafer supply chain. For both, the story is only just beginning, and the correction is handing back the entry points the rally had taken away. The work continues over the summer, waiting for the right price.
What drove the Collective Ideas last week
Collective Conviction Ideas: -1% WoW
The upside last week came from the Chinese consumer internet corner of the book, where the long-awaited mean reversion trade finally fired. The downside was concentrated in physical-AI sensing, where a poorly timed capital raise, priced at a discount with no major order announced alongside it, was read by the market as the wrong sequencing. The underlying business remains on track with record revenue and thirteen straight quarters of growth, but dilution and flow overhang weighed on the stock. European semiconductor infrastructure gave back ground in sympathy with the broader memory sell-off, despite sitting at a fundamentally different point in the cycle. The lean remains into the attention divergence: trimming the crowded AI and chip trades and adding to the neglected themes where valuations have compressed and catalysts are building.
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Best Content Shared This Week
📚 The Hidden Cost of AI Coding
Why Read? AI is making it easier than ever to write software, but it may also be undermining the open-source projects that modern technology depends on. The piece explores how AI-generated code is overwhelming volunteer maintainers, weakening incentives to contribute and raising an overlooked question: who maintains the digital infrastructure if everyone relies on AI to build it? Read here.
📚 The AI Boom’s Hidden Credit Risk
Why Read? This argues the biggest risk to the AI build-out is not demand but financing. Drawing parallels with the 2008 mortgage market, it suggests hyperscaler capex, take-or-pay compute contracts, and frontier AI labs have created a credit cycle where the real danger comes if growth merely slows rather than stops, challenging one of the market's strongest consensus trades. Read here.
Stock Of The Week
The Memory King Goes Global
SK Hynix has cemented its position at the heart of the AI infrastructure build-out, completing the largest-ever US listing by a foreign company and raising $26.5bn to expand production of the memory chips powering the next generation of AI systems. Demand for the offering was more than seven times oversubscribed, with investors willing to pay a premium to gain exposure.
The listing reinforces a simple reality: AI is no longer constrained by models; it is constrained by hardware. SK Hynix controls more than 60% of the global high-bandwidth memory (HBM) market, with production effectively sold out through 2026 and customers already reserving 2027 capacity. As every AI accelerator requires increasing amounts of HBM, memory has become one of the most valuable layers in the semiconductor stack.
The proceeds will fund further investment in advanced memory manufacturing, strengthening SK Hynix's position as one of the critical suppliers to the global AI build-out. If GPUs are the brains of AI, HBM is the bandwidth that allows them to think.
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Literacy Capital
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