The Data Flood Squeeze
sam lessin 🏴☠️@lessin
−17.1%
since Sep 30
The idea
I believe AI is creating a flood of data that has to be stored, moved, and processed, and that squeeze hits drives, flash, memory, and server CPUs long before anyone settles the GPU race. So this basket leans heaviest into the drive and flash makers, backs that up with server CPU exposure, and rounds out with the networking, storage systems, and equipment names that benefit as capacity gets built out. I skip GPU-led names on purpose and hold some cash while I wait for this to play out over the next year or two.
What it owns
- The companies that make the actual disks, flash, and memory chips experience the fastest price jumps when AI data outruns supply. · Micron TechnologyIt sells both the memory chips servers need and the flash that stores data, so a squeeze in either one lifts prices and revenue., Seagate TechnologyIt is one of two companies making the big drives that hold most of the world's stored data, so a data center storage crunch lifts its pricing power., Western DigitalIt is the other half of the hard drive duopoly focused on high-capacity drives data centers buy in bulk, so storage demand ahead of supply raises its prices., SanDiskIt makes flash memory and nothing else, so it feels a full benefit if data flood pushes flash prices up instead of staying oversupplied., Silicon Motion TechnologyIt makes the controller chips that go inside flash drives, so it gets paid on volume when more flash storage ships with the data flood.39%
- Every byte the AI flood creates gets prepped, moved, and served by ordinary server CPUs, not GPUs. · Advanced Micro DevicesIts EPYC chips process data in servers, so server CPU demand climbs with the data flood as long as AMD keeps winning share., Arm HoldingsIt collects a royalty on every chip built with its designs, including custom server CPUs cloud companies build, so it benefits regardless of which CPU wins., IntelIt ships most of the world's server CPUs, so an explosion in CPU usage lifts its biggest business even without catching up in GPUs.17%
- A data flood has to travel between drives and chips, so the network gear gets bought alongside the storage. · Arista NetworksIt sells the switches that carry data between servers and storage, so its orders rise with the amount of data being shuffled around data centers., Marvell TechnologyIt makes the chips inside hard drives, flash controllers, and the links that connect storage to servers, collecting a toll on both stored and moving data., Credo TechnologyIt sells the high-speed cables and chips that move data between racks, so its orders climb if data centers fill up the way the take says.13%
- When flash and memory makers expand to meet demand, these are the equipment makers they pay first. · Lam ResearchIt sells the machines flash makers use to expand factories, so it pays off when tight supply forces new spending on NAND production tools., Applied MaterialsIt gets paid when memory and flash factories expand, which is exactly what a supply squeeze forces over the next year or two.11%
- The sellers of the storage boxes data centers buy when they run out of room. · Dell TechnologiesIt sells both the servers with ordinary CPUs and the storage boxes, so it wins if data center buildouts keep server and storage orders growing., NetAppIt sells the storage systems companies buy when they suddenly have far more data to keep, so enterprise storage spending acceleration drives its growth.10%
- Cash11%