Chip stocks lose $1 trillion in market value, investors buck the trend by pouring into semiconductor ETFs to buy the dip

October 15 — As chip stocks shed $1 trillion in market value, ETF investors are pouring billions into the dip, with one fund offering triple the daily exposure to the semiconductor industry on track for a record weekly inflow. Data compiled shows that the $72 billion VanEck Semiconductor ETF attracted over $430 million in inflows over the past three trading days, poised for its largest weekly inflow since early September. Some investors are more aggressive: despite the triple-leveraged Direxion Daily Semiconductor Bull 3X ETF falling nearly 21% this week, about $3.8 billion has flowed in. For the $19 billion fund, this inflow is enough to set a record for the highest weekly inflow in history.

However, the market backdrop is not optimistic. As investors continue to worry about AI spending and intensifying global competition, the Philadelphia Semiconductor Index has fallen 12% over the past six trading days, wiping out about $1 trillion in market value. Concerns over excessive valuations and rising interest rates have further exacerbated volatility in the sector. Todd Sohn, Chief ETF Strategist at Baird Strategas, said: "The pullback in semiconductor stocks has accelerated again, but this still has not truly dampened investors' demand to use leverage to buy the dip."