US retail investors’ bottom-fishing in semiconductor leveraged ETFs takes a hit, with SOXL plunging 20.5% in a single day.

FactSet data shows that Direxion Daily Semiconductor Bull 3X Shares (SOXL) drew $6.1 billion in inflows last week, a new single-week record. Investors were betting on a rebound in chip stocks, but SOXL still dropped 10.8% this week, marking its third straight weekly decline, with a cumulative fall of over 43% since October. Inflows continued through Thursday, but SOXL plunged 20.5% that day, its largest single-day drop since June 23. By comparison, non-leveraged iShares Semiconductor ETF (SOXX) fell 6.8% on the same day, with a cumulative decline of around 15.9% since October. SOXL uses derivatives to track three times the daily performance of the semiconductor index, amplifying both gains and downside risks. The semiconductor sector is under pressure mainly due to market skepticism about the return on investment in AI infrastructure. Investors are reassessing whether tech giants’ aggressive spending can meet earnings expectations. Earlier, AI chip demand lifted semiconductor stocks, with SOXX’s year-to-date gain once nearing 59%, but recent sell-offs have tested its rally. Mike Reynolds, vice president of investment strategy at Glenmede, noted that semiconductors are highly sensitive to AI infrastructure development, and AI-related trades are currently facing some doubt. He added that after strong stock rallies and valuation expansions, investors’ re-examination of the AI theme’s potential returns is a healthy market move. Meanwhile, all three major U.S. stock indexes closed lower on Friday, with the S&P 500 Information Technology sector falling for the third consecutive week, its longest weekly losing streak since March.