Because chips provide the hardware necessary in order to run artificial intelligence (AI) applications, the semiconductor industry's performance is proverbially attached to the hip of AI. That said, traders can continue riding the strength of the AI wave with the Direxion Daily Semiconductor Bull and Bear 3X Shares (SOXL).
"Semiconductor stocks are standout performers so far in 2024, with investor appetite for AI stocks remaining elevated as AI chip leader Nvidia continues its streak of high growth," Forbes noted, adding that "numerous chipmaking equipment and chip stocks outperform the broader indices on a YTD basis – sixteen have YTD gains above 20%."
SOXL tracks the largest movers and shakers. Therefore, it is an ideal way for traders to get broad exposure to the cream of the semiconductor industry. SOXL seeks daily investment results equal to 300% of the daily performance of the NYSE Semiconductor Index. That index a rules-based, modified float-adjusted market capitalization-weighted index. It tracks the performance of the thirty largest U.S. listed semiconductor companies.
The triple leverage is certainly helping SOXL's case in pushing past 30% so far this year. As long as the AI theme persists through the rest of the year, that strength could keep pushing higher despite the slow start to the second quarter. The dip presents an opportune time for traders to buy in ahead of forthcoming rate cuts. This should give the fund another catalyst for further price increases.
