MW Forget buy the dip. Now retail investors are 'trading the mania' in chip stocks, and it's about to get messy.
By Barbara Kollmeyer
Goldman Sachs finds retail investors piling into leveraged semiconductor ETFs
Goldman is worried as investors have been piling into highly leveraged bets on chip stocks.
The Thursday morning set-up is looking a bit messy as oil bounces around and as investors sift through earnings from tech giants.
Qualcomm is standing out in Wednesday after-hour's crush. Despite a weak outlook, shares $(QCOM)$ are rocketing higher on news the chipmaker will enter the lucrative custom silicon market and already has a hyperscaler customer lined up.
Qualcomm's reception fits with recent narrative of surging semiconductor stocks. The PHLX Semiconductor Index SOX has surged 35% for April, marking the best one-month return since just before the 2000 dot-com bust. That has some technical analysts warning that such "parabolic moves" tend not to end well for investors.
More caution comes from call of the day where Goldman Sachs' trading desk discusses how retail investors have shifted from the old "buy-the-dip" approach to "trade the mania," piling into riskier bets on chip stocks in particular.
Investors have embraced chip stocks on the view that as hyperscalers plan to spend billions on datacenters, demand for AI chips will stay high.
Tearing a page out of the institutional investor playbook, the retail crowd has been chasing momentum in that hot market sector, rather than the usual levered ETFs aimed at the S&P 500 or Nasdaq Composite, a team led by Gail Hafif told clients in a note late Wednesday.
Retail participation in the Direxion Daily Semiconductor Bear 3X ETF, SOXS, and Direxion Daily Semiconductor Bull 3X ETF SOXL, is now at the 97th and 99th percentiles over five years, said Goldman. Those extreme bearish and bullish bets offer three times leverage either way on chip stocks.
Here's the Goldman chart showing the surge in volume for those leveraged bets:
"Retail participation in levered index products has come in, and we think persisting interest in sector trading will result in more violent thematic moves under the hood," said the Goldman team.
Explaining the setup further, Stephen Innes, managing partner at SPI Asset Management, writes on his Substack that those triple-leverage flows are setting up for a "bar fight."
"Retail is not just buying the market anymore, they've zoomed in and set up camp in high-vol corners," Innes said. "You've got people leaning hard into the AI winners with leverage, and at the same time others fading it just as aggressively. It's no longer a one-way story - it's a crowded two-way trade."
"And when it's set up like that, it doesn't take much to tip it one side, get squeezed, and it moves fast," he said.
This backdrop, according to Goldman, comes as other investors, like pension funds, have become less aggressive.
Last word from The Position Trader Substack, on why highly levered trades can be perilous for retail investors.
"If an index goes -10% one day and +10% the next, the index is slightly down overall-but a 3x ETF will magnify those swings and lose significantly more over the same period." During the global financial crisis when the Nasdaq-100 Invesco QQQ Trust Series I QQQ slid 48%, a three-times levered fund would have sunk more than 90%, near a total loss, Position Trader noted.
Read: Why it's time for 'sell in May and go away' to die
The markets
U.S. stock futures (ES00) (YM00) (NQ00) are mostly higher, with June Brent crude (BRNM26) reaching a four-year high, tapping $126 a barrel, before retreating.
Key asset performance Last 5d 1m YTD 1y S&P 500 7135.95 -0.03% 8.53% 4.24% 28.14% Nasdaq Composite 24,673.24 0.06% 12.97% 6.16% 41.42% 10-year Treasury 4.404 7.50 9.30 23.20 18.30 Gold 4631.7 -1.64% -1.51% 6.91% 42.59% Oil 107.17 10.48% -4.36% 86.67% 81.71% Data: MarketWatch. Treasury yields change expressed in basis points
The buzz
President Donald Trump may be mulling an escalation in Iran, with commanders set to brief him on possible new military action.
Iran's supreme leader, in a written statement, said the country will protect its nuclear and missile capabilities and that the future of the Persian Gulf will be without America.
Alphabet shares $(GOOGL)$ are jumping after an earnings beat and strong cloud growth dazzled investors who forgave a higher spending forecast.
Read: Why Alphabet's stock is the standout gainer on Big Tech's monster earnings day
Amazon stock (AMZN) is getting less of a boost as cloud growth increased, but the e-commerce giant is spending big to stay AI competitive.
Microsoft shares $(MSFT)$ posted an earnings beat, and shares are up after the company suggested improving cloud trends.
Meta stock $(META)$ is falling as forecast-beating profit and revenue couldn't ease investor worries about aggressive AI spending.
Surprisingly strong same-store sales are lifting shares of Chipotle $(CMG)$.
Weekly jobless claims and first-quarter GDP and the Fed's preferred inflation index for March, PCE inflation, are all due at 8:30 a.m. The Chicago Business Barometer is due at 9:45 a.m., followed by leading economic indicators at 10 a.m.
Best of the web
Loss of control: The AI apocalypse is closer than you think.
Why Morgan Stanley shifted its call on Federal Reserve rate cuts after the FOMC meeting.
Airbnb hosts prepped their homes for a World Cup windfall. They're still waiting.
The chart
The chart from Aletheia Capital, a Hong Kong research firm, shows the relationship between the German DAX DX:DAX, with a lag, and the ratio of industrial production to orders, which they suggest points to a market crash. Soaring energy prices from the Iran war, for one, are not helping Europe's largest economy. "The German government is now in a state of emergency, economically speaking," wrote Steven Schlegel, global commodities analyst at Aletheia.
Top tickers
These were the top-searched tickers on MarketWatch as of 6 a.m.:
Ticker Security name NVDA Nvidia META Meta AMZN Amazon MSFT Microsoft TSLA Tesla GOOGL Alphabet INTC Intel AMD Advanced Micro Devices TSM Taiwan Semiconductor Manufacturing AAPL Apple
Random reads
Palantir merch: A vintage-inspired $239 workwear jacket.
70-year goalie is about to become Spain's oldest player.
Red on one side, black on the other - a rare two-colored lobster is spared the kettle.
Beyond the newsroom
10 financial pros on the 5 times a CD ladder could make a ton of sense for you
-Barbara Kollmeyer
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 30, 2026 07:02 ET (11:02 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments