AI Financing Fears Hammer Chip Stocks: These 2 ETFs Are Cashing In on the Sell-Off
The Direxion Daily Semiconductor Bear 3X Shares ETF (NYSE:SOXS) and Direxion Daily Semiconductors Top 5 Bear 2X ETF (NYSE:TSXD) are emerging as major beneficiaries of Wall Street’s escalating concerns over AI financing, with both leveraged ETFs rallying as semiconductor stocks slide.
SOXS jumped 13.63% on Wednesday and a further 12% on Thursday while TSXD gained about 7% on Thursday after a 7.54% gain on Wednesday. SOXS traded approximately 68.1 million shares, according to Benzinga Pro, highlighting intense trading activity during the semiconductor sell-off.
SOXS Breaks Above Key Technical Level
SOXS, which targets three times the inverse of the daily performance of a semiconductor index, crossed above its 50-day moving average during Wednesday’s rally.
Support levels appear to be forming around the recent low of $28.46, which may act as a psychological barrier for traders. If the price continues to rise, the next resistance level could be identified around $47.19, where the stock opened on Thursday. Breaking through this level could lead to further gains, but sustained upward momentum will likely require strong buying pressure.
TSXD, which targets twice the inverse daily performance of the five largest U.S.-listed semiconductor companies, offers a more concentrated alternative. Its narrower exposure makes the performance of major chipmakers particularly important, although its daily leverage also introduces substantial volatility.
AI Financing Fears Drive the Trade
The rally comes as investors reassess the sustainability of AI infrastructure spending amid higher borrowing costs. Nvidia Corp(NASDAQ:NVDA), Advanced Micro Devices Inc (NASDAQ:AMD), Micron Technology Inc (NASDAQ:MU), SK Hynix Inc (NASDAQ:SKHY) and Sandisk Corp (NASDAQ:SNDK) have come under pressure.
On Thursday, the Philadelphia Semiconductor Index fell 3%, extending a six-session decline that erased approximately $1.64 trillion in market value, Reuters reported.
For traders expecting further weakness, SOXS and TSXD provide leveraged bearish exposure. However, both reset daily, so returns over longer periods can diverge from their stated inverse multiples. A sharp semiconductor rebound could quickly reverse their gains.
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