According to senior ETF analyst Eric Balchunas at Bloomberg, semiconductor ETFs SMH, SOXX, and SOXL led weekly fund flows after last week’s volatility.
- According to him, the sell-off was an opportunity for degen traders to buy the ETFs at a discount, and they are now beginning to take some profits.
- The ETFs were trading lower in early morning trade on Monday, with SOXL falling as much as 7%.
- The uptick comes after semiconductor stocks suffered one of their sharpest monthly declines in years.
The VanEck Semiconductor ETF (SMH), iShares Semiconductor ETF (SOXX), and Direxion Daily Semiconductor Bull 3X Shares (SOXL) saw the largest weekly inflows of any exchange-traded funds, marking a first for the semiconductor sector, according to Senior ETF analyst Eric Balchunas.
"The top 3 ETFs by weekly flows are all semiconductor ETFs... That's def a first," the Bloomberg analyst wrote in a post on X, citing last week’s selloff as the trigger. “ Semi stocks' selloff/vol was like chum in water for degen traders who piled into it prior to the 7% bounce (24% for SOXL) and are now beginning to take some profits (1D outflows).”
After doubling in the first half of 2026 on AI momentum, the sector swung sharply lower in July amid concerns over stretched valuations, a more hawkish Federal Reserve under new Chairman Kevin Warsh, and questions about whether AI infrastructure spending can keep generating returns at its current pace.
The biggest catalyst late in the week was the collapse of Situational Awareness, the AI-focused hedge fund run by Leopold Aschenbrenner.
Investors Step In After Historic Chip Selloff
July marked one of the worst months for the semiconductor sector. SMH recorded its worst monthly performance since 2008, while SOXX posted its steepest monthly decline since 2021, before a rally at the end of last week. SOXX and SMH rose as much as 7% on Thursday and Friday, while the 3x-leveraged SOXL surged as much as 24% on the bounce.
However, all three ETFs were edging lower in pre-market trade on Monday. SMH ETF’s price was down as much as 1.8% in pre-market trade. On Stocktwits, retail sentiment around the fund remained in ‘neutral’ territory over the past day, while retail chatter remained at ‘high’ levels.
SOXL price dropped over 7% in pre-market trade, while the SOXX ETF traded around 2% lower. Retail sentiment around both ETFs trended in ‘bullish’ territory over the past day, with chatter at ‘high’ levels.
Nvidia (NVDA), which comes among the key holdings of all three ETFs, was down over 1% in pre-market trade. Retail sentiment around NVDA stock fell to ‘neutral’ from ‘bullish’ territory over the past day and chatter reduced to ‘normal’ from ‘high’ levels.
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