Rising Giants in AI
NVIDIA Corp. NVDA and Advanced Micro Devices, Inc. AMD witnessed a notable surge in market value during midweek trading. NVDA stock soared over 8% from Tuesday’s close, while AMD fell just short of a 5% increase.
Recent reports suggest that the U.S. government is deliberating over granting Nvidia approval to export its advanced graphics processors to Saudi Arabia, a move that would mark a departure from the Biden administration’s restrictions on such exports to counter China’s digital advances.
This potential approval could provide a significant boost for NVDA and similar companies. While both Nvidia and AMD have seen robust returns over the past year, their forward momentum has slowed in recent months.
Positive Developments
Furthermore, optimism prevailed on Wednesday with reports hinting at ChatGPT parent company OpenAI considering a $6.5 billion equity financing round. Potential investors include Nvidia, Microsoft Corp, and Apple Inc. The increasing popularity of large language models could lead to accelerated growth for NVDA stock.
However, not all experts share the optimistic outlook, cautioning that the innovation sector might face substantial challenges ahead.
Companies like Asana Inc., which blend AI and big data in their operations, have acknowledged previous overhiring and spending practices during the early stages of the pandemic. The market is now adjusting to these new realities, potentially endangering the lofty valuations of some businesses.
The Direxion ETFs
Direxion, a financial services firm offering leveraged and inverse exchange-traded funds, provides traders with a convenient avenue to profit from popular stocks and sectors. Those bullish on artificial intelligence might find the Direxion Daily AI and Big Data Bull 2X Shares appealing.
Conversely, skeptics of AI and the valuations of certain tech companies could opt for the Direxion Daily AI and Big Data Bear 2X Shares. Both ETFs track daily investment results – with AIBU aiming for 200% returns and AIBD seeking 200% inverse returns – based on the Solactive US AI & Big Data Index.
Investors should note that these funds are designed for short-term exposure due to the compounding effect of volatility, potentially eroding long-term performance.
Examining AIBU and AIBD ETFs
The AIBU ETF: Although the AI and Big Data Bull fund had a promising start in the first half of the year, it faced heightened resistance in the latter half.
- AIBU has been struggling to surpass the $27 mark, facing significant hurdles in its upward momentum, akin to the challenges faced by NVDA stock.
The AIBD ETF: On the contrary, the AIBD ETF faced challenges in the first half of 2024 but seemed to find its footing in the latter half.
- While AIBD displayed weakness in trading, it held steady around the $22 support level, indicating robust support.
Recent volume upticks in the inverse ETF suggest a growing interest in betting against the prevailing AI trend.
This post contains sponsored content. It is for informational purposes only and does not constitute investment advice.
