Leveraged ETF Traders Commit to Nvidia, Shun Tech Overall

Senior ETF Analyst

Aug 20, 2024

Reviewed by: etf.com Staff

Edited by: James Rubin

Leveraged ETF traders would rather bet on Nvidia specifically than the semiconductor industry as a whole. Year-to-date inflows for the GraniteShares 2x Long NVDA Daily ETF (NVDL) are $3.4 billion versus $884 million for the Direxion Daily Semiconductor Bull 3X Shares (SOXL).

While demand for both ETFs has been strong this year, NVDL’s heftier inflows suggest that many traders are willing to forgo diversification in order to get more targeted exposure to the single biggest beneficiary of the AI boom.

That said, despite smaller inflows this year, SOXL, which has been around since 2010, still has more assets under management than NVDL, which debuted in 2022: $13.5 billion versus $6 billion.

In fact, the only leveraged ETF with more AUM than SOXL is the $24 billion ProShares UltraPro QQQ (TQQQ).

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Like SOXL, TQQQ is a part of the ETF class of 2010. It tracks a broader index (the highly popular Nasdaq 100) than SOXL (the NYSE Semiconductor Index), which has generally made it the more popular fund.

But not so this year. While SOXL has picked up $884 million in inflows since the start of the year, TQQQ has registered outflows of more than $4 billion.

In other words, this year leveraged ETF traders have favored Nvidia over semiconductors as a whole, and they’ve favored semiconductors over tech as a whole.

NVDL Outshines TQQQ

The inflows reflect just how concentrated the gains from the AI boom have been so far. Shares of Nvidia are up 160% year-to-date, leagues ahead of the 17% return for the Invesco QQQ Trust (QQQ).

NVDL has soared 360%, nearly 10 times the 40% gain for TQQQ.

Meanwhile, the unleveraged iShares Semiconductor ETF (SOXX) and leveraged SOXL have climbed 21% and 29%, respectively.

Semiconductor companies have been the biggest beneficiaries of the AI boom so far. In addition to Nvidia, companies like AMD and Broadcom have generated billions of dollars of revenues from the build-out of the infrastructure that is used to power AI applications like ChatGPT.

Those three companies are the biggest holdings of SOXX, composing 27% of the ETF.

Sumit Roy

| Contact: [email protected]

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.

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