Memory Is A Bubble, But Nvidia Protected – Jan Van Eck On Semis Surge

Jan Van Eck views memory stocks as a bubble-like moment driven by price increases rather than volume growth during a temporary shortage. He warns that higher prices will push customers to economize on memory usage, eroding current pricing power, and VanEck is reducing exposure to memory in its actively managed funds, though he stops short of calling a definitive top.

Van Eck contrasts memory companies unfavorably with Nvidia, which he describes as the mainframe of AI rather than simply a GPU manufacturer, giving it durable software and cost advantages. He argues Nvidia will be one of the AI leaders ten years from now and notes its forward price-to-earnings ratio is only in the low 20s, supporting its valuation case. Nvidia represents approximately 17 percent of SMH, with TSMC next at roughly 9 percent, followed by Intel, Broadcom, AMD, Micron, Texas Instruments, and Qualcomm each at roughly 6 to 7 percent. Van Eck also considers TSMC a long-term survivor given its manufacturing capability, capital intensity, and broad ecosystem visibility. SMH is approximately 65 billion dollars in assets under management, up 58 percent year-to-date and 135 percent over 12 months at the time of recording, with a 29 percent annualized return since inception. The fund concentrates on the top 25 semiconductor names and allows its largest holding to reach 20 percent, which Van Eck says eliminates drag from smaller, more competitively vulnerable companies.

Van Eck acknowledges company-specific bubbles within AI, citing Oracle and CoreWeave as examples that each fell roughly 50 percent from prior-year highs on concerns about the financial sustainability of the OpenAI ecosystem. He argues this partial deflation means investors need not fear a broader AI bubble collapse, and that demand for AI compute remains far above current supply, meaning the sector is not irrationally priced overall. VanEck remains overweight semiconductors in its broad portfolio models but is considering taking some profits.

Van Eck's primary concern about financial markets is government spending in developed economies. The US 10-year yield moved above 4.6 percent after trading around 4.3 percent, and 30-year yields in Britain and Japan were hitting multi-decade highs. He notes the US budget deficit peaked at 6.5 percent two years prior and projects it could fall to 5 percent before any new military spending, well above his preferred ceiling of 3 percent. He estimates that spending half a trillion dollars on an Iran war could push the deficit back to 6.5 or 6.9 percent, and warns that a loss of confidence in US government obligations would leave nowhere to hide, including in SMH.

Van Eck describes gold as reemerging as the number one global currency because it is not tied to the US, China, or India, noting that China and India maintain capital controls and do not seek reserve currency status. Gold mining companies, which fell roughly 90 percent from 2011 to 2016 due to excessive debt and uncontrolled production costs, have since rebuilt balance sheets and are now generating strong cash flows. He cautions that gold could trade sideways after a strong prior-year run and that it takes on different correlations at different times, but argues recent price moves are consistent with a global currency thesis rather than a US inflation story.

Van Eck predicts 2026 will be the year of corporate blockchain adoption, with institutions such as Bank of New York and JP Morgan creating corporate chains that combine blockchain benefits with controlled ecosystems. He holds a long-term price target for Bitcoin at roughly half the market value of gold, implying a significant price multiple of its current level, and views the current drawdown as unsurprising given Bitcoin's four-year halvening cycle. He describes the stablecoin bill as one of the three most important events in US financial history, alongside Alexander Hamilton's financial reforms and FDR's bank rescues, because it is the first time US law has permitted a technology company to compete directly against the banking system. He characterizes the competitive threat to traditional banks as marginal rather than existential, drawing a parallel to money market funds in the late 1970s, which offered higher rates than banks but failed to displace them due to customer stickiness.

SpaceX is initially listing only approximately three to four percent of its shares, which Van Eck says is too small a float to meet index inclusion thresholds, meaning the company will need to drip additional shares into the market over time. He estimates cumulative liquidity from SpaceX and related listings could reach hundreds of billions of dollars, comparable to the roughly 300 billion dollars in tariff revenue raised last year, and predicts its public market entry will encourage large AI companies to follow. Van Eck's three biggest ten-year macro themes are AI, the rise of India, and over-borrowing by the United States, United Kingdom, and Japan, and he projects India will be the size of continental Europe economically within ten years, citing sustained pro-business reforms under Modi including bankruptcy and labor law changes.