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Semiconductor Outlook Bodes Well for This ETF

BY | ETF Database
8:11 am ET 07/28/26 | 15 VIEWS
Of late, some air has come out of semiconductors and that’s been to benefit of the Direxion Daily Semiconductor Bear 3X Shares (SOXS B). Entering July 27, that leveraged bearish ETF was sitting on a one-month gain of nearly 58%.Add to that, Monday was a weak day for semiconductor stocks. Many of the marquee names slumped, sending SOXS to another impressive intraday performance. Clearly, recent price action suggests SOXS is the path of least resistance for aggressive traders looking to capitalize on semiconductor headlines, but those traders shouldn’t forget about the Direxion Daily Semiconductor Bull 3x Shares (SOXL B). SOXL attempts to deliver 300% of the daily returns of the NYSE Semiconductor Index. Obviously, given the scintillating performance notched by the bearish SOXS, SOXL has been a rough trade. However, near-term gyrations aside, the semiconductor space is still backed by solid fundamentals that could support occasional use of SOXL.SOXL Can ReboundNo geared ETF should be treated as anything other than a short-term trade. That’s particularly true of the potent SOXL and SOXS. Still, SOXL may offer rebound potential for tactical traders. Consider some of the points in the Semiconductor Industry Association’s (SIA) State of the U.S. Semiconductor Industry report, which was released on Monday. While global chip competition is intensifying, the U.S. is the industry leader. That’s pertinent; SOXL’s index is comprised of domestic chip stocks. “The United States continues to expand its domestic semiconductor ecosystem. Since 2020, semiconductor companies have announced more than $770 billion in private-sector investments across 160 projects in 30 states, strengthening domestic manufacturing, equipment production, materials, packaging, and research capabilities,” noted the SIA. “These investments are helping build a more resilient semiconductor supply chain, supporting high-paying American jobs, and reinforcing the nation’s economic and national security while complementing the industry’s globally interconnected supply chains.”Semiconductor ETFs and AIExperienced traders know that ETFs such as SOXL and SOXS are frequently moved by artificial intelligence (AI) headlines. That’s likely to remain the case for the foreseeable future. That’s been a drag on chip stocks of late. Still, there are reasons to believe that AI may re-enter the spotlight in bullish form. This would help SOXL regain its leadership position. “Every layer of AI infrastructure depends on semiconductor technologies, from logic processors and memory to analog and foundational chips,” adds the SIA. “A single AI server rack contains more than 4,500 packaged semiconductors, with chips representing more than 95% of an AI server rack’s value and more than half of total AI data center capital expenditures. According to SIA and Deloitte research, government and industry are expected to invest more than $4 trillion in AI data center infrastructure globally through 2028, with up to $2.8 trillion of that investment dedicated to semiconductors.” For more news, information, and analysis, visit the Leveraged & Inverse Content Hub.

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