AI Trade Isn't Dead Yet: Investors Pour $10.6 Billion Into Chip ETFs in October While Dumping Memory

Investors are showing little appetite for abandoning the AI trade, but October’s ETF flows suggest they are becoming more selective about where they place their bets.

Semiconductor-focused ETFs attracted about $10.6 billion in October, according to data compiled by ETF.com, even as concerns over stretched AI valuations triggered a pullback in technology stocks. However, the money wasn’t flowing uniformly across the sector. While investors aggressively bought leveraged and traditional semiconductor funds, the Roundhill Memory ETF (BATS:DRAM) suffered significant withdrawals.

But are investors rotating within the AI trade rather than exiting it altogether?

Semiconductor ETFs Attract Billions Despite AI Sell-Off

The Direxion Daily Semiconductor Bull 3X Shares (NYSE:SOXL) attracted approximately $7.27 billion in October, while the iShares Semiconductor ETF (NASDAQ:SOXX) gathered another $3.32 billion.

SOXL’s inflows were particularly striking, representing nearly 30% of its assets under management at the end of October. However, the leveraged ETF still recorded $4.07 billion in net outflows for the year, suggesting October’s buying interest hasn’t fully reversed earlier withdrawals.

The fund’s performance also highlights the volatility investors are navigating. SOXL, which had gained as much as 616% at one point in June, was up approximately 62% year to date by the end of October.

SOXX also saw its year-to-date gain shrink from 88.5% in early October to around 54% as semiconductor stocks retreated from their highs.

DRAM Outflows Point to Profit-Taking in Memory Trade

The biggest contrast came from DRAM, which lost approximately $2.25 billion in October, equivalent to more than 11% of its assets.

The outflows came despite the fund remaining up approximately 67% year to date. DRAM had gained as much as 191% following its April debut, before the rally lost momentum.

The divergence suggests investors may be taking profits in memory stocks after an exceptional run, even as they continue to seek exposure to the broader semiconductor industry.

Is This a Rotation Within the AI Trade?

October’s flows do not necessarily indicate that investors are abandoning AI-related stocks. Instead, the contrasting demand for SOXL and SOXX versus DRAM suggests a possible shift in how investors are positioning themselves within the technology trade.

However, SOXL’s leveraged structure makes its inflows particularly noteworthy. The fund targets three times the daily performance of its semiconductor index, making it vulnerable to compounding effects and amplified losses during volatile markets.

Meanwhile, SOXX offers unleveraged exposure to semiconductor companies, providing a different risk profile for investors seeking to participate in the sector’s longer-term growth.

For now, the flow divergence suggests that enthusiasm for semiconductor exposure remains intact, but investors are becoming more selective about which parts of the AI supply chain they want to own.

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