Chip stocks lose $1 trillion in market cap as investors buck the trend and rush into semiconductor ETFs to buy the dip.

On October 15, as semiconductor stocks saw $1 trillion wiped off their market value, ETF investors poured billions of dollars into the sector amid the downturn. A fund offering triple daily exposure to the semiconductor industry's returns is on track this week for a record-breaking weekly capital inflow. Compiled data shows that the $72 billion VanEck Semiconductor ETF attracted over $430 million in inflows over the past three trading days, positioning itself for the largest single-week inflow since early September. Some investors have grown even more aggressive: despite the triple-leveraged Direxion Daily Semiconductor Bull 3x ETF declining nearly 21% cumulatively this week, it still recorded approximately $3.8 billion in inflows.

For this $19 billion fund, this volume of inflows would be sufficient to set a historical record for its highest single-week total. However, the market backdrop remains unoptimistic. Due to ongoing investor concerns over AI spending and intensifying global competition, the Philadelphia Semiconductor Index fell 12% cumulatively over the past six trading days, eroding roughly $1 trillion in market capitalization. Concerns about overvaluation and rising interest rates have further exacerbated volatility within the sector. "The pullback in semiconductor stocks has accelerated once again, but this has yet to truly suppress demand among investors looking to leverage lower prices," stated Todd Sohn, Chief ETF Strategist at Baird Strategas. (Jin10)