SOXL Fell 20.5% Thursday After Record $6.1 Billion in Inflows Last Week

Direxion’s SOXL fell 20.5% Thursday after taking in a record $6.1 billion last week, extending an October slide that has left the leveraged semiconductor fund down more than 43%.

Inflows continued through Thursday even as SOXL’s price sank. The ETF has lost 10.8% this week and is on a three-week losing streak. Thursday’s decline was its steepest since June 23.

The unleveraged iShares Semiconductor ETF (SOXX) dropped 6.8% Thursday, and its October decline was about 15.9%. SOXL uses derivatives to seek three times the daily return of a semiconductor index, amplifying moves in both directions.

Pressure on chip shares has grown as investors question returns from major technology companies’ AI infrastructure spending. Demand for AI chips had helped lift SOXX’s gain for the year to nearly 59% at one point.

Mike Reynolds, vice president of investment strategy at Glenmede, said the AI trade was facing skepticism. Reynolds characterized renewed scrutiny of the theme’s potential returns as healthy after strong share-price gains and higher valuations.

All three major U.S. stock indexes finished Friday lower. The S&P 500 information technology sector also posted a weekly loss for the third week in a row, its longest losing run since March.