As if semiconductors didn’t need more momentum, the passage of “One Big Beautiful Bill” could keep investors dipping into chips. In turn, traders may want to watch a few leveraged products from Direxion.
If you’re going to run artificial intelligence (AI), you need the requisite hardware to power the technology. This is where the semiconductor industry has been a prime beneficiary of the AI boom, benefiting names like Nvidia (NVDA), Advanced Micro Devices (AMD), and Taiwan Semiconductor Manufacturing Company (TSMC).
More Government Backing
Supporting the semiconductor industry may not have come as a surprise. The previous administration under former President Biden introduced the CHIPS Act to bolster federal backing of domestic chip companies. Under President Trump, that backing will continue.
A few salient benefits included in the bill:
- An investment tax credit for semiconductor manufacturers of 35% for breaking ground on new facilities before a 2026 deadline. This could bolster the domestic semiconductor manufacturing industry, thereby also creating jobs in the U.S.
- The tax credit marks a 5% increase from a previously drafted version of the bill and a 10% increase from Biden’s CHIPS Act
ETFs to Watch
Nvidia is still the flashiest name to watch in the industry. Traders may want to maximize their profit potential and take a look at doubling their exposure with the Direxion Daily NVDA Bull 2X Shares (NVDU). With AI growth skyrocketing, demand for chips from Nvidia should continue.
Nvidia isn’t the only name set to benefit from the AI boom. Another company that might not get as many headlines as the former, but deserves attention, is AMD. For 2x exposure, take a look at the Direxion Daily AMD Bull 2X Shares (AMUU).
Though not headquartered in the U.S., another company to watch is TSMC. Given the tax incentives offered by the bill, TSMC could feel compelled to build more plants in the U.S. It’s already looking to expand operations in the U.S. as a means to avoid the negative effects of tariffs. Furthermore, broad semiconductor strength could translate into gains for the Direxion Daily TSM Bull 2X Shares (TSMX).
““Given the risk of tariffs, increasing manufacturing in the U.S. remains a key consideration for these large semiconductor companies,” said Daniel Newman, CEO at tech advisory firm Futurum Group.
Trading individual stocks certainly opens traders up to concentration risk. That said, a way to mitigate risk is to simply trade the whole sector. Traders can do just that via the Direxion Daily Semiconductor Bull and Bear 3X Shares (SOXL). The fund tracks the performance of 30 of the largest movers and shakers within the industry. That said, the ETF adds exposure to the aforementioned Nvidia, TSMC, and AMD. Furthermore, it adds additional industry giants like Texas Instruments and Broadcom.
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