MU, WDC, SKHY, AMD — VanEck’s Nicholas Frasse Downplays Volatility In Semiconductor Stocks, Says Chip Trade Is Still Very Strong

During an interview with CNBC, Frasse said that the current downturn and volatility in chip and memory stocks is just a reversion to the mean more than anything else.

• Frasse said investors appear to be looking for earnings beats and guidance that far exceed consensus expectations.
• Over the long term, Frasse said that this downturn does not matter much for his firm, which is trying to keep its AI supercycle perspective in focus.
• Frasse added that he believes the AI trade cycle is still in the first third, while calling the technology transformative even though there is a lot of speculation around it.

Memory and chip stocks fell in Thursday’s pre-market trade, with shares of Micron Technology Inc. (MU), SK Hynix Inc. (SKHY), Marvell Technology Inc. (MRVL), Intel Corp. (INTC), Seagate Technology Holdings (STX), Western Digital Corp. (WDC), SanDisk Corp. (SNDK), and others in the sector declining between 3% and 16%.

The Roundhill Memory ETF (DRAM) was down nearly 6% at the time of writing. The First Trust Nasdaq Semiconductor ETF (FTXL) declined about 2%.

Frasse Downplays Volatility In Chip Stocks

During an interview with CNBC, Frasse said that the current downturn and volatility in chip and memory stocks is just a reversion to the mean more than anything else.

“At the end of the day, it appears that investors are looking for clear beats and guidance way outside of whatever the consensus is to really turn in the right direction,” he said.

Over the long term, Frasse said that this downturn does not matter much for his firm, which is trying to keep its AI supercycle perspective in focus.

“We think that the chip trade is still very strong, even if you’re seeing a little bit of volatility in the near term,” he added.

AI Trade Cycle Still In Its First Third, Says Frasse

Frasse added that he believes the AI trade cycle is still in the first third, while calling the technology transformative even though there is a lot of speculation around it.

“From an adoption standpoint, I think that we’re still very low on the adoption side even though we hear about it every single day,” he said.

Frasse believes that the full-fledged potential of AI has not been explored yet, and regardless of who wins the race and where the revenue comes from, at the end of the day, it’s chips that will power this industry.

“In our eyes, there’s no world where we will need less compute, and we’re using less AI moving forward. At the end of the day, a lot of this is top-down noise,” he added.

Frasse Says It Is Difficult To Pinpoint The Next Bottleneck In AI

Despite concerns about memory supply constraints, Frasse believes that it is difficult to pinpoint the next bottleneck in AI.

He added that while there is merit in concerns about memory being a bottleneck, he pointed to innovations in the industry such as High Bandwidth Memory (HBM) and High Bandwidth Flash (HBF) as attempts to ease these constraints.

Adding to the decline in memory stocks on Thursday was Western Digital’s fourth-quarter (Q4) result, which drew a mixed response from Wall Street despite generally solid results.

According to TheFly, UBS said Western Digital's results were solid and expects management to maintain its beat-and-raise cadence despite only slightly better-than-expected guidance. The firm trimmed its price target on WDC stock to $525 from $560, while keeping a ‘Neutral’ rating.

Rosenblatt also called the quarter strong, arguing the selloff reflected lofty expectations rather than deteriorating fundamentals. The firm slashed its price target to $800 from $900 while keeping a ‘Buy’ rating.

Summit Insights, however, downgraded the stock to ‘Hold’ from ‘Buy’, warning that Western Digital's transition to heat-assisted magnetic recording (HAMR) could pressure margins in 2027.

The S&P 500 ETF Trust (SPY) is up 23% over the past 12 months, while the Invesco QQQ Trust (QQQ) is up 28%.

The iShares U.S. Technology ETF (IYW) is up 40% during this period, while the VanEck Semiconductor ETF (SMH) is up 98%.

For updates and corrections, email newsroom[at]stocktwits[dot]com.<