Leveraged ETF assets double in two months as investors press AI bet
Leveraged ETF assets have doubled in two months as investors increasingly bet on AI. However, experts warn that this trend may not be sustainable, especially if there is a pullback in the AI market. Major tech companies are significantly increasing their investments in AI infrastructure, with spending expected to exceed $1 trillion by 2027.
- ▪Leveraged ETF assets have doubled in two months due to increased investor interest in AI.
- ▪Experts caution that the current rally may not be sustainable and could reverse if the AI market pulls back.
- ▪Major tech companies are projected to invest over $700 billion in AI infrastructure this year.
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There's risk that the money flowing in could reverse as, or even more aggressively if there's a pullback in the AI trade as investors face big losses in the funds."It's not surprising investors are reaching for leverage given the extent of the mania happening in AI- a common behavior during all bull markets", says Adam Crisafulli, Vital Knowledge founder. But even though AI is driving enormous revenue growth for a wide swath of firms, it is only generating earnings/cash for a handful of companies, especially memory/chip companies, he notes.South Korea and Taiwan markets are particularly popular and have recently surged past several long-established Western countries.
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