Investors are piling into the viral Roundhill Memory ETF (CBOE: DRAM) as it remains in a local bear market and as the volatility in the industry continues. DRAM ended last week at $63, 23% lower than the year-to-date high of $81.35

DRAM ETF Inflows are Still Rising

American investors have pumped over $8.8 billion into DRAM, a viral ETF that tracks the biggest companies in the memory space.

Launched in April, the fund now has over $23 billion in assets under management, and is one of the most actively traded in Wall Street. Its volume on Friday jumped to over $64 million.

The inflows jumped last week as investors waited for SK Hynix’s American debut, which saw it raise over $26 billion. Its stock jumped by over 14% as brokers rushed to fill its orders as the offering was significantly oversubscribed. 

DRAM’s inflows have jumped even as its price tumbled from a record high of $81.36 to the current $63. Some of its biggest constituents have dropped, even after publishing strong financial results. 

Micron, the biggest memory chip manufacturer in the US, has dropped by 21% from its all-time high, even after publishing strong numbers. Its revenue jumped by over 300% in its third fiscal quarter, and its management expects the Q4 revenue to hit $50 billion. 

Samsung Electronics stock has also retreated to 285,000 won from the year-to-date high of 375,000. Other top constituents like Seagate (NASDAQ:STX) and SanDisk (NASDAQ:SNDK) have also retreated from their highest levels this year.

Most memory stocks are expected to publish strong financial results in the coming weeks. Benzinga data shows that the average estimate is that SanDisk’s revenue jumped by 336% in the second quarter to $8.31 billion, while Seagate’s rose by 42% to $3.50 billion.

DRAM Faces Some Major Risks Ahead

Despite the ongoing revenue growth, the DRAM ETF faces some major risks ahead. The main one is concentration as the top three companies account for over 70% of the fund.

Another one is that SK Hynix stock may retreat in the US, dragging its South Korean shares. While SK Hynix is not a new IPO, recent history shows that stocks of many companies that have gone public recently have jumped and then pulled back. This includes popular names like SpaceX, Klarna, and Circle.

Further, there is a risk that problems that have affected memory stocks in the past may return. The main challenge has been that the industry is highly cyclical, with boom periods being followed by busts. For example, most memory companies experienced a sharp revenue dive in 2023 amid oversupply issues. 

Technicals also suggest that DRAM may drop in the near term. It has formed a head-and-shoulders pattern, a common bearish reversal sign in technical analysis. This pattern points to a strong bearish breakout, potentially to $50.

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