Semiconductor and tech inverse ETFs surge on AI debt fears
Last week’s top-performing leveraged and inverse ETFs reflect a sharp sell-off in tech and AI-related stocks, driven by concerns over debt levels, rising borrowing costs, and shifting Federal Reserve rate-cut expectations.
Semiconductors led the way
The SOXS ETF, which provides three times inverse exposure to the PHLX Semiconductor Index, topped the list with over 43% weekly returns. The decline was driven by hotter-than-expected inflation data, rising financing costs for AI infrastructure, and growing doubts over the debt and spending models supporting AI chip buyers.
The SMHD ETN, offering three times inverse exposure to a semiconductor-focused index, followed with over 37% gains. Both funds highlight how semiconductor stocks, key to AI hardware, have become a focal point for market volatility.
Another semiconductor ETF, SSG, which provides two times short leverage to the Dow Jones U.S. Semiconductors Index, rose by more than 21% last week. The broader tech sector sell-off extended to biotech and emerging markets, where LABD and EDZ also posted gains.
Beyond semiconductors: tech and biotech
The TECS ETF, which offers three times inverse exposure to the technology sector, gained over 25% last week. The broader tech sell-off was fueled by worries over AI-related debt, rising inflation, and high borrowing costs.
Similarly, the BERZ ETN, providing three times inverse exposure to FANG and innovation stocks, rose by over 23%. Concerns about excessive AI spending, rising credit and debt worries, and a broader bond market yield surge contributed to the decline in high-growth tech names.
Other Leveraged and Inverse ETFs with Significant Weekly Gains
The HIBS ETF, which provides three times daily short exposure to high-beta S&P 500 stocks, was among the top performers last week. Inverse ETFs gained as stocks fell due to a sharp sell-off in AI-related and tech stocks over heavy borrowing and spending concerns, hot September inflation data, and climbing oil prices.
Single-stock exposure
The SNK ETF, offering two times inverse exposure to SpaceX, climbed after the company’s stock fell ahead of its third-quarter earnings report. Pre-earnings jitters, high-multiple AI and space valuations, lingering insider lockup expirations, and market nervousness weighed on the stock.
The MSTZ ETF, which aims to provide inverse exposure to the daily price movement of Strategy Inc. stock, ranked among the inverse ETFs list with over 21% returns last week. Strategy shares fell primarily due to MSCI approving new index eligibility rules and a broader technology sector sell-off.
