The fund that outperformed 97% of its peers bet on memory chips. What stocks did it buy?

Shares of memory chip makers are a promising area for investment as artificial intelligence will continue to drive demand for chips over the next decade, investment manager Divya Mathur of ClearBridge Investments (a subsidiary of investment giant Franklin Templeton) told Bloomberg. The emerging markets equity fund he heads, which aims for long-term capital appreciation, has outperformed 97% of its peers in 2025, the agency points out.

"The memory industry was never designed for demand from AI - this new growth driver has only come to us in the last year or so," said Mathur, who manages the ClearBridge SMASh Series EM fund of U.S. investment giant Franklin Templeton. According to Bloomberg, he has made large bets on the securities of South Korean companies: the world's largest memory chip maker Samsung Electronics and SK Hynix, a key supplier to Nvidia. Mathur opened positions in both companies in 2015, and his confidence in them is only growing, the agency notes. When exactly in ClearBridge SMASh Series EM was the last purchase of securities of these companies, Bloomberg does not specify.

According to Mathur, the market is still underestimating the scale of the AI sector's need for memory chips. The head of the fund also referred to the estimates of US technology companies, according to which the industry is "in the second year of a ten-year refresh cycle". He emphasized the need to hedge positions even within a promising sector. "The advantage of owning shares of both Samsung and Hynix is that it insures against potential strategy missteps or delays," Mathur explained.

Samsung Electronics' profits more than tripled to a record last quarter as demand for AI servers drove memory chip prices sharply higher. For SK Hynix, 2025 was a hugely successful year thanks to its partnership with Nvidia. Samsung's stock more than doubled in 2025, while SK Hynix's stock price nearly quadrupled.

That said, valuations of Asian beneficiaries of the AI boom remain moderate compared to their U.S. counterparts: Samsung's securities trade at a 9.3 multiple and SK Hynix at 7 to expected earnings per share (Forward P/E), while the multiplier for the U.S. Philadelphia Semiconductor index is about 26, Bloomberg notes.

Analysts remain bullish on both securities with a consensus "Buy" (Buy), but their growth potential is assessed differently. Calculated by MarketScreener average target price of shares of Samsung Electronics in 161.5 thousand won assumes the potential growth of 12.2% in the next year. At the same time, SK Hynix quotes have already come close to the estimate of fair value: the consensus target of 777.1 thousand won per paper leaves investors upside of 3.8%.

This article was AI-translated and verified by a human editor