The Roundhill Memory ETF (DRAM) is near the top of the $50 to $60 range it’s traded in for the past two months. Its fundamentals could be the spark for an upside breakout. Even against a bumpy performance backdrop, Wall Street earnings expectations for memory stocks keep climbing, and worries over a short-lived spike in margins are fading. Upcoming reports, starting with Micron (MU) on September 30, could confirm something bigger: memory is shifting from a boom-and-bust commodity market to a more durable, contracted industry, backing the case for still-strong, long-term growth ahead. And DRAM’s pullback from its highs combined with a brighter earnings outlook makes for an attractive valuation setup for investors thinking longer-term.
DRAM had an impressive start to its trading, surging +191% into its year-to-date highs. It then gave back about half of that dollar gain before settling into a well-defined trading range between $50 to 60 over the past two months. As of September 18, it’s on the verge of a potential upside breakout.
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This isn’t the first time DRAM has tested the top of its range. In early September, the fund started to climb again, but rising Treasury yields and spiking oil prices soured the broader market mood, in our view. Then came a clearer break lower after Dario Amodei, Anthropic’s CEO, published his essay, We Must Pace the Frontier, sparking initial fears the AI buildout may be scaled back as model development slows. Those concerns didn’t last long as DRAM bounced back from its September 14 lows, a potential sign that investors decided the initial worries were overblown.
Wall Street agrees those fears may be overblown. Since Amodei’s essay, analysts at Bank of America, Citigroup, Goldman Sachs, Jefferies, and others have pointed to the same story: there still aren’t enough chips and infrastructure to go around, memory makers still have pricing power, AI end demand keeps growing, and more compute, not less, will be needed as frontier AI model testing becomes more important. The conviction is showing up where it counts: rising analyst estimates, both near- and long-term.
We start with aggregated earnings per share (EPS) estimates for DRAM’s underlying exposures. Analysts’ profit forecasts for calendar years 2026 through 2029 are considerably higher than they were six months ago. Even more interesting is that analysts used to think earnings would top out in 2028. Now, consensus expects profits to keep climbing beyond 2029.
Profitability expectations improved as well. Net income margins were previously expected to peak in 2027 and then fade meaningfully by 2029. Today's estimates paint a stickier picture, with margins expected to hover around 50% or better all the way through 2029.
This marks a real shift in how analysts think about memory. For decades, they treated it like a commodity, where every upcycle ended in a bust: profitability would spike, new supply would flood the market, and earnings would collapse. Analysts always penciled in that downturn ahead of time. That playbook is getting tossed out.
Micron (MU) reports on September 30, with most other big players releasing results in late October. We'll be watching for color on multi-year supply agreements, how much capacity is sold out, and estimates for aggregate AI infrastructure spending, all signs that this once commodity-like spot market is turning into a longer-run, contracted industry. If memory leaders keep highlighting that shift, it would back up the trend of rising estimates and give investors more confidence in the long-term growth story. That, in turn, could help DRAM hold onto any breakout above $60.
The combination of DRAM’s price pullback and rising analyst estimates could create an attractive entry point for longer-term investors.
Here’s how we get there. Using our “what’s priced in” framework, we work backwards from the fund’s underlying exposures to estimate how much profit growth investors are already expecting. With deliberately conservative assumptions, including a long-run price-to-earnings (P/E) ratio of only 4 to 6 times, a multiple that assumes memory never escapes its commodity past, and DRAM’s September 18 closing price, we estimate the market is pricing in long-run EPS of around $13.
The latest Wall Street estimates project 2030 EPS closer to $15, well above what is priced in. In other words, even valued as if the re-rating never happens, the market is underwriting less growth than analysts now expect. We believe that makes today’s setup look a lot like March, right before DRAM’s big rally.
Memory stocks have shaken off recent AI-slowdown fears and look poised to break out of a two-month trading range. The spark could come from company commentary that backs up Wall Street’s string of estimate increases. Bigger picture, the pullback from June’s highs has reset the earnings bar priced into the underlying stocks to a level that looks easier to clear. That is exactly what makes the entry point attractive for investors thinking beyond the next quarter.
To learn more about DRAM and its current holdings, click here: https://www.roundhillinvestments.com/etf/dram/
Glossary
EPS (earnings per share): A company's net income subtracted by preferred dividends and then divided by the number of common shares it has outstanding.
Net income margin (net profit margin, net margin): A company’s net income divided by total revenue or net sales.
Price-to-earnings ratio (P/E): A financial metric that shows the relationship between a company's share price and its earnings per share, providing investors with a valuation measure
Discounted cash flow (DCF): A valuation method used to estimate the present value of an investment based on its expected future cash flows. A reverse DCF assumes price equals present value, and estimates future cash flows.
Discount rate: The required rate of return used to convert future cash flows in a discounted cash flow into present value.
Terminal multiple (terminal P/E): A valuation metric used to estimate a company's value at the end of a forecast period, often applied in DCF models.
Investors should consider the investment objectives, risks, charges, and expenses carefully before investing. For a prospectus or summary prospectus, if available, with this and other information about the Fund, please call 1-855-561-5728 or visit our website at www.roundhillinvestments.com/etf/dram/. Read the prospectus or summary prospectus carefully before investing.
Memory Companies Risk. The Fund invests in Memory Companies, which may have limited product lines, markets, financial resources or personnel and are subject to the risks of changes in business cycles, world economic growth, technological progress and government regulation. These companies are also heavily dependent on intellectual property rights, and challenges to or misappropriation of such rights could have a material adverse effect on such companies. Securities of Memory Companies tend to be more volatile than securities of companies that rely less heavily on technology. Memory Companies typically engage in significant amounts of spending on research and development, and rapid changes to the field could have a material adverse effect on a company’s operating results. Additionally, the development, manufacturing, and commercialization of semiconductor memory technologies, including HBM, DRAM and NAND, as well as related subsystems, equipment, materials, and services, are complex and evolving, and may face unforeseen technical challenges (including yield and integration issues), supply chain disruptions, intense competition and pricing volatility, regulatory developments (including export controls), and market acceptance uncertainties. As a result, investments in Memory Companies may be subject to higher levels of risk and volatility.
Semiconductor Companies Risk. The Fund invests in companies primarily involved in the design, distribution, manufacture and sale of semiconductors. Semiconductor companies are significantly affected by rapid obsolescence, intense competition and global demand. The Fund is also subject to the risk that the securities of such issuers will underperform the market as a whole due to legislative or regulatory changes. The prices of the securities of semiconductor companies may fluctuate widely in response to such events.
Line of Business Risk. Certain companies included in the Fund’s portfolio will be engaged in other lines of business unrelated to the development of memory products, and these lines of business could adversely affect their operating results. The operating results of these companies may fluctuate as a result of these additional risks and events in the other lines of business. Despite a company’s possible success in activities linked to its development of memory products, there can be no assurance that the other lines of business in which these companies are engaged will not have an adverse effect on a company’s business or financial condition.
Active Management Risk. The Fund is actively-managed and its performance reflects investment decisions that the Adviser and/or Sub-Adviser makes for the Fund. Such judgments about the Fund’s investments may prove to be incorrect. If the investments selected and the strategies employed by the Fund fail to produce the intended results, the Fund could underperform as compared to other funds with similar investment objectives and/or strategies, or could have negative returns.
Concentration Risk. The Fund is concentrated in the industry or group of industries comprising the information technology sector. The Fund may be susceptible to an increased risk of loss, including losses due to adverse events that affect the Fund’s investments more than the market as a whole, to the extent that the Fund’s investments are concentrated in the securities and/or other assets of a particular issuer or issuers, country, group of countries, region, market, industry, group of industries, sector, market segment or asset class.
Emerging Markets Risk. The Fund’s investments in emerging markets may be subject to a greater risk of loss than investments in more developed markets. Emerging markets may be more likely to experience inflation, political turmoil and rapid changes in economic conditions than more developed markets. Emerging markets often have less uniformity in accounting and reporting requirements, unreliable securities valuation and greater risk associated with custody of securities.
South Korea Risk. The Fund invests significantly in the securities of South Korean issuers. The Fund is subject to certain risks specifically associated with investments in the securities of South Korean issuers. Substantial political tensions exist between North Korea and South Korea. Escalated tensions involving the two nations and the outbreak of hostilities between the two nations, or even the threat of an outbreak of hostilities, could have a severe adverse effect on the South Korean economy. In addition, South Korea’s economic growth potential has recently been on a decline because of a rapidly aging population and structural problems, among other factors. The South Korean economy is heavily reliant on trading exports, especially to other Asian countries and the U.S., and disruptions or decreases in trade activity could lead to further declines. The South Korean economy’s dependence on the economies of Asia and the U.S. means that a reduction in spending by these economies on South Korean products and services or negative changes in any of these economies may cause an adverse impact on the South Korean economy and therefore, on the Fund’s investments. In addition, South Korea is located in a part of the world that has historically been prone to natural disasters such as earthquakes, hurricanes or tsunamis, and is economically sensitive to environmental events. Any such event may adversely impact South Korea’s economy or business operations of companies in South Korea.
Depository Receipts Risk. Depositary receipts may be less liquid than the underlying shares in their primary trading market. Any distributions paid to the holders of depositary receipts are usually subject to a fee charged by the depositary. Holders of depositary receipts may have limited voting rights, and investment restrictions in certain countries may adversely impact the value of depositary receipts because such restrictions may limit the ability to convert the equity shares into depositary receipts and vice versa. Such restrictions may cause the equity shares of the underlying issuer to trade at a discount or premium to the market price of the depositary receipts.
Preferred Securities Risk. The Fund may invest significantly in depositary receipts whose underlying securities are non-voting preferred securities. Preferred securities combine some of the characteristics of both common stocks and bonds. Preferred securities are typically subordinated to bonds and other debt securities in a company’s capital structure in terms of priority to corporate income, subjecting them to greater credit risk than those debt securities. Generally, holders of preferred securities have no voting rights with respect to the issuing company unless preferred dividends have been in arrears for a specified number of periods, at which time the preferred security holders may obtain limited rights. In certain circumstances, an issuer of preferred securities may defer payment on the securities and, in some cases, redeem the securities prior to a specified date. Preferred securities may also be substantially less liquid than other securities, including common stock.
New Fund Risk. The Fund is a recently organized investment company with a limited operating history. As a result, prospective investors have a limited track record or history on which to base their investment decision.
Non-Diversification Risk. As a “non-diversified” fund, the Fund may hold a smaller number of portfolio securities than many other funds. To the extent the Fund invests in a relatively small number of issuers, a decline in the market value of a particular security held by the Fund may affect its value more than if it invested in a larger number of issuers. The value of the Fund Shares may be more volatile than the values of shares of more diversified funds.
Swap Agreements Risk. The Fund may utilize swap agreements to derive its exposure to Memory Companies. Swap agreements may involve greater risks than direct investment in securities as they may be leveraged and are subject to credit risk, counterparty risk and valuation risk. A swap agreement could result in losses if the underlying reference or asset does not perform as anticipated. In addition, many swaps trade over-the-counter and may be considered illiquid. It may not be possible for the Fund to liquidate a swap position at an advantageous time or price, which may result in significant losses.
Roundhill Financial Inc. serves as the investment advisor. The Funds are distributed by Foreside Fund Services, LLC which is not affiliated with Roundhill Financial Inc., U.S. Bank, or any of their affiliates.