Forget buy the dip. Now retail investors are 'trading the mania' in chip stocks, and it's about to get messy.
Retail investors are piling into highly leveraged semiconductor ETFs, with Goldman Sachs warning that this trend may lead to 'violent thematic moves'. The PHLX Semiconductor Index has surged 35% in April, its best one-month return since before the 2000 dot-com bust.
Goldman Sachs has expressed concern over retail investors' increasing bets on chip stocks via highly leveraged ETFs. The PHLX Semiconductor Index surged 35% in April, its best one-month return since before the 2000 dot-com bust, prompting warnings from technical analysts. Retail participation in Direxion Daily Semiconductor Bear 3X ETF and Direxion Daily Semiconductor Bull 3X ETF is at the 97th and 99th percentiles over five years. Investors are betting on chip stocks due to expected high demand for AI chips from hyperscalers. Goldman's trading desk notes that retail investors have shifted from 'buy-the-dip' to 'trade the mania', piling into riskier bets. This trend may lead to significant losses if the market moves against these leveraged positions.
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