Livewire recently featured our global equities fund in their 2026 Outlook Series, examining stocks to avoid in 2026, where we shared our bearish outlook on major PC and server manufacturers. Our Portfolio Manager, Armina Rosenberg, explained our short positions on HP, Dell, Lenovo, and ASUS, highlighting how surging memory prices are compressing margins for these OEM manufacturers.
Memory has been a clear beneficiary of the AI supercycle, but companies using memory as a key input are being negatively impacted. As Armina noted:
"Memory is around 15% of the bill of materials for those players. And when you have one line item in your COGS like that going up materially, what you're seeing is gross margin compression."
DRAM prices have increased 150% since the 2023 trough, with some components rising three to four times in recent months. Our analysis suggests these companies could see hundreds of basis points shaved from gross margins with every doubling in DRAM prices. Even with potential mix shifts and price increases for consumers, these manufacturers will struggle to maintain their gross margins, making them key shorts for 2026.
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