Are Index Funds Making the Market “Irrational”?

The cleaner read-through is that the money is not in the issuer itself, but in the capex wave the listing implies. If HBM remains the binding constraint for AI deployment, the first-order winners are the tool vendors with backlog visibility and pricing power, not the memory makers taking balance-sheet risk to add capacity. That makes ASML the highest-quality duration asset, AMAT the broadest lever to incremental fab spend, and LRCX the most exposed if memory capex proves cyclical rather than structural.

The second-order risk is that the same capital raise that validates scarcity also accelerates future oversupply. In a 6-18 month window, new HBM capacity can turn today’s margin expansion into tomorrow’s price compression, which matters most for MU and eventually for SKHYV as a public equity story. The market is likely pricing the scarcity phase correctly for the next few quarters, but may be underpricing the speed with which memory can revert once every major player sees the same profit pool.

On the market-structure side, IPOs followed by index inclusion and passive ownership create a mechanical bid that can support post-listing performance for weeks to a few months, independent of fundamentals. That flow is real, but it is not permanent; lockup expiries and any disappointment in initial public-market trading can create an air pocket. The contrarian view is that consensus is overconfident that AI makes memory non-cyclical; if HBM ASPs flatten or utilization slips, the trade flips fast from scarcity premium to glut discount.