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Memory makers including Samsung Electronics and SK Hynix are riding surging AI-driven demand to record profits, with net income estimated to grow 400% for Samsung this year and close to 300% for SK Hynix. Yet, as Bloomberg reported, the South Korean memory giants trade at less than 6 times forward estimates versus nearly 20 times for TSMC. Similar gaps exist globally, with Micron Technology and Kioxia trading at less than 10 times forward earnings while Nvidia sits at 22 times.

Bulls generally argue that this time is different, pointing to AI-driven consumption that has spread from high-bandwidth memory to more general DRAM, flash and other products. Skeptics point to the lumpy nature of memory earnings, which have historically tracked volatile cycles in the broader economy. Tom told Bloomberg that the sector's long history of cyclical earnings is a key reason the market may be slow to re-rate memory stocks, even as profits climb.

"Looking at the history of memory in general, cyclicality of the earnings is just so high," Tom told Bloomberg. "I think it will take the market time to really believe that these returns will persist."

Read the full article on Bloomberg.

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