The Kobeissi Letter points to a sharp reversal in how aggressively traders are betting on chip stocks. Assets in US leveraged semiconductor ETFs, funds that use borrowed money to amplify the daily move of chip indexes, have fallen by $63 billion from their June peak down to $100 billion, the lowest level since late April. That is a 39% drop and the largest such drawdown since April 2025, when these assets more than halved from a prior high. To put the scale in context, this single corner of the market accounts for 63% of the entire $100 billion decline in assets across all US leveraged ETFs over the same stretch, meaning the retreat from risk has been concentrated heavily in semiconductors. The move is striking because it follows a frenzy: assets in these funds nearly tripled between the last week of March and the June peak. Even after the unwind, they remain about 400% above their January 2023 level, so this is a cooling of an extreme rather than a full capitulation. The signal for investors is that the fast, leveraged money that piled into chips is now stepping back hard, which can drain the momentum that carried the sector even if the underlying businesses stay healthy.
Why it matters · When leveraged money that tripled into chips pulls back 39%, the sector can lose momentum even while the businesses stay strong.
Worth asking · Is this leverage flush a healthy reset that steadies chip stocks, or the first crack in the momentum that has carried them?