Why Direxion Daily Semiconductor Bull 3X ETF Dropped Today
Key Points
Micron, AMD, and Nvidia stocks are down on AI growth worries this morning.
Micron, AMD, and Nvidia stocks are the three biggest positions in the Direxion Daily Semiconductor Bull 3X Shares ETF.
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The Direxion Daily Semiconductor Bull 3X Shares ETF (NYSEMKT: SOXL) is a momentum back -- but its momentum is moving in the wrong direction today.
Over the weekend, as you've probably heard, leading tech voices in the AI space Elon Musk, Dario Amodei, and Sam Altman all warned of the dangers of artificial intelligence getting too... artificially intelligent -- and too quickly. The leaders of SpaceXAI, Anthropic, and OpenAI uniformly called for a coordinated slowdown in AI development.
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And that could be bad news for semiconductor stocks.
Image source: Getty Images.
What's bugging semi investors today
According to Direxion, SOXL's three biggest holdings are Micron (NASDAQ: MU), Advanced Micro Devices (NASDAQ: AMD), and Nvidia (NASDAQ: NVDA) -- shares of which are down 5,7%, 4.5%, and 2,8%, respectively. Other top-10 holdings of the ETF, such as Marvell Technology (NASDAQ: MRVL) and Applied Materials (NASDAQ: AMAT), are down even more -- roughly 6% each.
With so much red ink spilling among its top-10 holdings, and the ETF working hard to triple those losses, it's no surprise that SOXL is down 15% through 12:10 p.m. ET today.
What this means for the Direxion Daily Semiconductor Bull 3X Shares ETF
The good news is that as fast as the Direxion Daily Semiconductor Bull 3X Shares ETF declines when sentiment on semiconductors is negative, it can rebound just as fast if investors decide the news isn't as bad as feared -- and I think that's likely to happen here.
Just because Musk, Amodei, and Altman all say they want to slow down AI development today doesn't mean they'll act on this tomorrow -- especially not with China racing to advance AI with all gas, no brakes.
My advice: Focus less on what these CEOs say, and more on what they actually do about it.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Applied Materials, Marvell Technology, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.
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