Investors poured a record amount of money into a leveraged semiconductor ETF last week. The bet has not paid off.
The fund attracted its largest-ever weekly inflow as traders wagered on rising chip stocks. Renewed concerns about AI spending soon reversed those gains.
The ETF uses borrowed money to amplify returns. That structure cuts both ways when the underlying stocks fall.
Worries about returns on the massive buildout of artificial intelligence have resurfaced this month. Chip stocks, among the biggest beneficiaries of AI spending, have taken the hit.
Leveraged funds magnify daily price moves, so losses mount faster than they would in a standard index fund. Investors who bought near the peak are feeling the sharpest sting.
The reversal shows how quickly sentiment can shift in the AI trade. A strategy that looked rewarding weeks ago now carries steep costs.
Traders are reassessing whether the AI investment boom can deliver the profits that fueled the rally. For leveraged chip bets, the timing could hardly be worse.
