Since markets bottomed in late March, the Roundhill Meme Stock ETF (NYSE:MEME) has rallied 82%.
The Invesco QQQ Trust (NASDAQ:QQQ) is up 28% over the same window and the SPDR S&P 500 ETF Trust (NYSE:SPY) rose by 18%.
Meme stocks have tripled the Nasdaq 100 and more than quadrupled broader market returns.
The starting line was March 30, when Washington and Tehran agreed to a ceasefire that paused — though did not end — the Strait of Hormuz crisis that has gripped oil markets since late February.
Risk appetite returned overnight. But what has surprised even Wall Street is the shape of the rebound.
The riskiest pockets of the market are running the fastest. And a new Goldman Sachs analysis just highlighted the engine behind and the risks ahead.
Chart: MEME ETF vs. QQQ vs. SPY – Performance Since March 30
Retail Volumes Have Jumped 28% Since Mid-April
According to a Goldman Sachs report shared with clients on Thursday, retail trading volumes have risen 28% since mid-April.
Retail trading now accounts for roughly 20% of total U.S. equity trading volumes, up from 15% a decade ago, though still below the 2021 peak of 24%.
Margin debt is now flashing the loudest signal.
Across all FINRA member firms, margin debt has surged to $1.3 trillion — equal to 52% of gross customer balances, the highest reading on record and six percentage points above the previous high set in 1998.
At the major retail brokers — Interactive Brokers Group Inc. (NASDAQ:IBKR), Robinhood Markets Inc. (NASDAQ:HOOD) and Charles Schwab Corp. (NYSE:SCHW) — margin balances hit $230 billion at the end of March, or 1.8% of customer assets.
That level is slightly above the 2021 record.
Retail is not just back. It is highly leveraged.
“Retail trading activity has recently tilted towards stocks with small market caps, volatile returns, and high valuations,” Goldman analyst Daniel Chavez wrote.
“Retail also tends to trade more actively in stocks with high short interest,” he added.
Goldman estimates the retail share of trading in Russell 3000 stocks with the highest short interest reached 13% in 2025, up from 9% in 2019 and 11% in 2021.
The Holdings Table Tells The Story
The MEME ETF is concentrated in a dozen small-and-mid-cap names spanning AI infrastructure, memory storage, fuel cells, quantum computing and space communications.
Three holdings have done most of the work.
- Applied Optoelectronics Inc. (NASDAQ:AAOI), the ETF’s largest holding at 9.68% weight, is up 162% since March 30. The optical networking company is a direct play on AI data-center buildouts.
- Sandisk Corp. (NASDAQ:SNDK), a 4.70% weight, is up 153%, riding the NAND memory supercycle as HBM allocations divert supply away from consumer storage.
- Bloom Energy Corp. (NYSE:BE), a 5.26% weight, is up 142% after delivering a Q1 double beat and raising 2026 revenue guidance to $3.40 billion to $3.80 billion from $3.10 billion to $3.30 billion — a play on the AI power crisis.
Other Top Contributors
Only AST SpaceMobile Inc. (NASDAQ:ASTS) has lagged, up just 1% over the period.
| Company | MEME ETF Weight | Return Between March 30 and May 13 |
|---|---|---|
| Applied Optoelectronics Inc. | 9.68% | +161.89% |
| Sandisk Corp. | 4.70% | +152.79% |
| Bloom Energy Corp. | 5.26% | +142.46% |
| AXT Inc. | 7.14% | +131.24% |
| Nebius Group NV | 4.82% | +124.66% |
| Astera Labs Inc. | 4.77% | +123.49% |
| Credo Technology Group Holding Ltd. | 4.46% | +115.65% |
| IonQ Inc. | 5.42% | +107.82% |
| Coherent Corp. | 4.95% | +83.80% |
| Ciena Corp. | 4.48% | +58.33% |
| Lumentum Holdings Inc. | 5.21% | +57.36% |
| Oklo Inc. | 4.61% | +52.83% |
| AST SpaceMobile Inc. | 5.31% | +1.34% |
The Risk Hiding Inside The MEME Rally
Goldman’s research has one more finding worth pausing on. Stocks with elevated retail trading activity tend to carry higher valuations and exhibit above-average volatility, even after controlling for fundamentals like sales growth and profitability.
More importantly, those same stocks have historically underperformed by more than the rest of the market when they miss earnings expectations.
In Goldman’s sample of S&P 500 earnings results since 2021, stocks with the highest retail trading share fell an average of 2.8 percentage points the day after a negative earnings surprise.
Stocks with the lowest retail share fell just 1.7 percentage points. That gap matters. It suggests retail-heavy stocks don’t just rally harder on good news. They also break harder when the news turns.
That is the trapdoor under the MEME ETF rally.
Applied Optoelectronics trades on a forward earnings multiple that prices in years of flawless AI execution.
Bloom Energy’s guidance assumes the data center power demand continues to accelerate.
Sandisk needs the NAND supercycle to extend through 2027. All three names have rallied because retail traders bid them up, often with borrowed money, on the assumption that nothing breaks.
If anything does break, the same dynamic runs in reverse.
Image: Shutterstock
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