Source: Finance Association
① With the AI wave, how popular is the semiconductor sector in the US stock market right now. The following comparison chart is probably the most obvious at a glance:
② The ratio between the Philadelphia Semiconductor Index and the S&P 500 Index broke through 1 for the first time this Thursday;
③ In other words, this is the first time in its 30-year history that the Philadelphia Semiconductor Index has surpassed the S&P 500 index.
Taking advantage of the AI wave, how popular is the semiconductor sector in the US stock market right now. The following comparison chart is probably the most obvious at a glance:
$PHLX Semiconductor Index (.SOX.US)$versus$S&P 500 Index (.SPX.US)$The ratio broke through 1 for the first time this Thursday — in other words, this is the first time in the history of the Philadelphia Semiconductor Index over the past 30 years that it has surpassed the S&P 500 index.
On Thursday, although the S&P 500 also performed well, closing up more than 1%, setting the 16th highest closing record in the year, it was still significantly inferior to the performance of the Philadelphia Semiconductor Index: the latter surged 3.36% this Thursday, which is equivalent to more than three times the increase in the general market.
Among them, the industry leader$NVIDIA (NVDA.US)$It closed 4.5% higher again on Thursday, breaking through $900 for the first time in history, while the market capitalization surpassed the $2.3 trillion mark in one fell swoop.
However, judging from the comparison during the year so far, the Philadelphia Semiconductor Index has accumulated a cumulative increase of 23.7% over the past two months, which also far outperforms the market.
Looking at the overall industry background, since the beginning of the year, most of the Q4 financial reports issued by global semiconductor giants have ushered in significant growth, and many leading companies have surpassed market expectations in terms of revenue, net profit, and number of new orders. Even if some performance is not strong enough, they generally give good future performance guidelines. To a large extent, this is already reflected in semiconductor sector stock prices.
It is worth mentioning that the fanatical enthusiasm that continues to grow in the semiconductor sector is now evident in derivatives trading such as options and ETFs.
According to a set of data, semiconductor stock options trading is exploding as investors are betting on the most popular artificial intelligence topics in the stock market today.
In February, the average daily nominal volume of put options and call options for constituent stocks of the Philadelphia Semiconductor Index exceeded 145 billion US dollars. This is roughly double the average at the end of 2023 and seven times that of a year ago.
Options trading is a typical component of large fluctuations in the stock market, and the rapid expansion in the scale of related individual stock options trading may indicate that investors who missed the rise in the semiconductor industry over the past year are catching up. Furthermore, options not only provide a way to bet on further increases in chipmaker stock prices, but also provide hedging protection when gains are weak.
Leveraged ETF tracking Nvidia is being robbed
In addition to the boom in the individual stock options market, investors are also pouring into exchange-traded funds (ETFs) that focus on Nvidia this year. On Wednesday, ETF capital inflows tracking the chip giant's stock hit a record high.
According to Liber's data, double the number of Nvidia ETFs —$GraniteShares 2x Long NVDA Daily ETF (NVDL.US)$The daily net inflow reached a record $197 million on Wednesday. The ETF's assets under management have soared from $2137.5 million at the beginning of the year to $1.41 billion.
In the past, many risk-averse investors mostly stayed away from these single-share leveraged ETFs. Because these ETFs aim to provide huge returns in a very short period of time, they are generally more popular with speculators. These ETFs try to use financial derivatives and debt as leverage to amplify the daily earnings of the underlying individual stocks, generally two to three times.
Regarding the current fervent buying demand in this field, Todd Rosenbluth, chief ETF strategist at Vettafi, said that Nvidia has always been the hottest stock in 2024, and many investors are eager to seek higher returns, even if they face greater risks.
“We expect demand for leveraged ETFs on a single stock will continue to grow as a new wave of must-invest companies emerge,” Rosenbluth pointed out.
The data also shows that these leveraged ETFs that track Nvidia, such as$GraniteShares 2x Long NVDA Daily ETF (NVDL.US)$,$DIREXION DAILY NVDA BULL 1.5X SHARES (NVDU.US)$,$T-REX 2X LONG NVIDIA DAILY TARGET ETF (NVDX.US)$The monthly net inflow reached a record high in February.
But the crazier scenario clearly includes this month — the GraniteShares ETF surpassed last month's net monthly inflow record in the first six days of this month.
Since the beginning of 2024, the asset size of the three Nvidia-linked ETFs has jumped 5 to 11 times, while their prices have risen between 143% and 218% this year so far, outperforming other ETFs.
Editor/jayden