The Direxion Daily Semiconductor Bull 3X Shares ETF (SOXL) has suffered a big reversal in the past few months as signs emerged that the artificial intelligence (AI) bubble was starting to fade. The SOXL ETF, which provides a leveraged exposure to the biggest semiconductor companies, retreated to $26.30, down by 62% from its 2024 high.

SOXL ETF slips after NVIDIA earnings

NVIDIA is the second-biggest constituent in the SOXL ETF and is the most important semiconductor company in the world. It has emerged as a crucial part of the technology sector because of its AI chips and the software behind it known as CUDA.

NVIDIA published strong results on Wednesday that demonstrated that it was doing well as demand remained elevated. The company’s revenues jumped to $39.3 billion in the third quarter, higher than the expected $38.5 billion. It was a 78% increase from what it made a year earlier, bringing its annual revenue figure to $130 billion. 

The challenge, however, is that the company issued a softer-than-expected forward guidance. It now expects that sales will be $43 billion in the third quarter, lower than the expected $43.2 billion. Some analysts were expecting the guidance to be about $48 billion. 

The other issue is that the company’s revenue and earnings growth happened at the lowest margin since 2022. As such, while these results were strong, they signal that the company’s business will continue growing at a lower rate this year.

There are concerns about the return on investment (RoI) on AI investments by companies like Microsoft, Xai, Google, and Amazon. While the valuation of companies like OpenAI and xAI has soared, it is unclear whether they are making a lot of money. Microsoft’s revenues have not soared because of its Copilot offerings.

Other SOXL companies may slow

The latest NVIDIA earnings mean that the other large players in the SOXL ETF may struggle too. AMD, the third-biggest constituent, has dropped sharply in the past few months. It has formed a death cross as the 50-day and 200-day moving averages crossed each, signaling more weakness ahead.

AMD’s recent earnings showed that its revenues rose by 12% YoY to $7.65 billion, while its net income dropped to $482 million.

Broadcom, the biggest company in the SOXL ETF has also retreated in the past few weeks. It dropped by about 15% from its highest level this year to the current $212.

The other big names in the SOXL Fund like Texas Instruments, Lam Research, and Marvell Technologies have slipped lately.

Semiconductor stocks lack a clear catalyst

The main concern for the SOXL ETF is that the sector lacks a clear catalyst for now. The AI industry has been the biggest area of business in the past three years. With its growth slowing, the sector may struggle to get another narrative.

For starters, the SOXL is a fund that provides investors with access to the semiconductor industry. Unlike other generic funds, the SOXL fund maximizes returns by adding a 3x leverage to its daily returns.

SOXL ETF technical analysis

SOXL ETF chart by TradingView

The daily chart shows that the SOXL share price has retreated in the past few months. It has dropped from last year’s high of $70 to the current $26.25. The stock has moved below the 50-day and 200-day Exponential Moving Averages (EMA), a sign that bears are in control.

The SOXL ETF stock has also dropped below the 61.8% Fibonacci Retracement level. It has also formed a symmetrical triangle pattern whose two lines are about to converge. Therefore, the stock will likely have a strong bearish breakdown, with the next point to watch being at $19.65, the 78.6% retracement point. 

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The Nifty 50 index pulled back this year and moved into a correction phase as concerns about valuation, slow growth, and Donald Trump’s tariffs accelerated. The index, which tracks the biggest Indian companies, dropped to 22,255 on Thursday, down by about 14% from the lowest point this year. Here are the top three reasons it may rebound this year.

Reserve Bank of India rate cuts

The first major reason why the Nifty 50 index retreated is that the RBI has started to cut interest rates by 0.25%, moving them from 6.5% to 6.25% in January. It was the first interest rate cut in over 5 years.

Economists and the bond market believes that the bank has more room to cut. The ten-year bond yield dropped to 6.70% on Thursday, down from 7.6%  in 2022 as the RBI slashed interest rates. Similarly, the five-year yield dropped to 6.60% from a high of 7.50%.

The case for more rate cuts increased after the latest Indian inflation data. According to the statistics bureau, the headline Consumer Price Index (CPI) fell to 4.3% in January from 5.22% a month earlier. It has dropped in the past few consecutive months.

Indian stocks will likely do well as bond yields drop because of the falling inflation date. Historically, equities tend to rise when the local central bank is cutting rates.

These expectations explain why analysts are still upbeat about the Nifty 50 index. Some of the top analysts who have boosted their Nifty 50 index forecasts are from JM Financial and Jefferies.

March is a good month for Indian stocks

The other bullish case for the Nifty 50 index is that March is typically a good month for Indian equities.

An analysis by Jefferies noted that the index has historically risen in March as it has risen seven times in the last 10 years. While seasonality is not always the best approach to use, analysts note that the Indian stock market has catalysts that may push it higher in the longer term.

Some of these catalysts are the robust government spending in the country and the fact that the government has implemented some tax cuts to stimulate spending this year.

Still, seasonality is not always accurate, and it is common for an asset to buck the trend.

Further, there are signs that Indian investors are not panicking as the Nifty 50 index crashes. The evidence of this is that the VIX index has dropped in the last 6 sessions, a sign that Indian investors are not dumping stocks and moving to the hedges. That is a sign that they expect the market to bounce back.

Nifty 50 index has formed a falling wedge pattern 

The other bullish catalyst for the Nifty 50 index is that the Nifty 50 index has formed a falling wedge chart pattern, a popular bullish reversal sign on the weekly chart.

This pattern comprises two falling and converging trendlines. In most cases, the pattern leads to a strong rebound of an asset.

This bullish case is also made by the fact that the Indian stock market has remained above the 100 day Exponential Moving Average (EMA) level. It has also moved above the ascending trendline that connects the lowest swings since June 2022. A rebound will likely push the index to the all-time high of 26,276 rupees.

However, a drop below the important support level at 21,276 rupees will invalidate the bullish view as it will signal that there are more sellers in the market, especially as Donald Trump tariff risks rise.

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The South African rand strengthened a bit against the US dollar as traders watched the latest South African inflation data and the upcoming tariffs from the United States. The USD/ZAR exchange rate traded at 18.55 on Thursday morning, down from the year-to-date high of 19.25. 

What next for the USD to ZAR after the latest inflation data and after forming a megaphone pattern?

South Africa rising inflation rate

The USD/ZAR exchange rate pulled back slightly after the South African statistics agency released the strong consumer inflation data.

The headline consumer price index rose to 3.2% in January, matching the expected figure from analysts. It rose from 0.1% to 0.5% on a month-on-month basis.

The core CPI, which excludes the volatile food and energy prices, rose 3.5% and 0.2% on a YoY and MoM basis during the month. 

These numbers came as the statistics agency changed how it calculate inflation by adding more products in the basket. 

Experts, including those at the South Africa Reserve Bank, have warned that South Africa’s inflation will keep rising this year. The view is that it will move to the midpoint range of the South central bank. In a recent statement, the central bank governor said:

“It is not a time for us to be complacent. We have to assess this meeting by meeting, guided by the extent of the data and what we see as the outlook in this environment where you have got so much uncertainty.”

The inflation figure came as concerns rise that Donald Trump would focus on South Africa, which he has accused of human right abuses. He has cited a recently-passed law that allows the government to reposses unused land from large owners.

The law, which passed in January, ensures that the government pays the market price for this land. It differed from another law that let the government repossess the land without any compensation.

US tariffs and volatility

The USD/ZAR pair has also reacted to the fear of the upcoming Donald Trump tariffs on imported items. Trump has threatened to pull South Africa from the AGOA deal that allows South Africa and other countries to avoid US tariffs.

Exiting the country from AGOA would affect goods worth about $20 billion annually. Some of these goods are platinum, gold and cars.

The other key USD/ZAR news to watch will be the upcoming US GDP and PCE inflation data. Economists expect the data to show that the American economy expanded by 2.5% in the fourth-quarter, lower than the 3.5% rate in Q3.

The challenge for the US is that Trump’s tariffs will lead to a slowdown in the economy as individuals and companies will slow their spending.

Analysts expect that the Federal Reserve will maintain interest rate steady in the coming meetings as inflation expectations rise.

USD/ZAR technical analysis

The USD to ZAR exchange rate has pulled back in the past few days after hitting the key resistance level at 19.20, the highest swing on June 6. It has pulled back to th 23.6% Fibonacci Retracement level.

The pair has remained slightly above the 50-day and 100-day moving average, a sign that the uptrend is intact. 

Mot notably, the pair has formed a giant megaphone pattern. This pattern is comprised of two falling and diverging trendlines and is one of the most popular bullish continuation signs in the market.

Therefore, the pair will likely continue rising in the next few weeks, with the initial level to watch being at 19.95, the highest point in June last year. A move above that level will raise odds that the USD/ZAR will get to 20 this year. 

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The AMD stock price has collapsed in the past few months as the semiconductor company goes through a substantial slowdown. It has retreated to a low of $104.75, its lowest level since November 1, and 55% below the highest point in 2024. This crash has pushed its market cap from $342 billion to $170 billion, leading to a $172 billion wipeout.

AMD stock crashes as growth concerns remain

AMD, the giant semiconductor company, is under pressure as concerns emerge that the artificial intelligence (AI) industry was slowing. 

These concerns rose on Wednesday when NVIDIA, its biggest competitor, published its financial results. Its numbers showed that its revenue growth accelerated in the fourth quarter, reaching $39.3 billion. That brought its total annual revenue to over $130 billion. 

The concern, however, is that its guidance was relatively weaker than expected. It expects that its quarterly revenue will be $43 billion in the first quarter, lower than what some analysts were expecting. 

The most recent financial results showed that AMD’s business did well in the last quarter. Its revenue rose by 24% to $7.65 billion in the third quarter to $7.6 billion, while its gross profit soared by 33% to $3.8 billion.

Most of this revenue growth came from its data center business whose revenue jumped by 69% to $3.8 billion. The client division revenue rose by 58% to $2.3 billion.

However, the other key parts of AMD’s business remained under pressure. For example, the gaming segment made $563 million, down by about 59% from the same period a year earlier. The embedded revenue dropped by 13% to $923 million.

AMD is gaining AI market share

What is clear is that AMD is now gaining market share against NVIDIA in the data center division, a trend that may continue as more companies move to its chips. AMD’s GPUs are often of higher quality and cost much less.

The main concern is whether the sector will continue seeing strong growth in the coming years now that AI spending may start slowing.

Many large companies have insisted that their spending will continue. For example, Amazon has pledged to spend over $100 billion in AI capital spending this year. The big four spenders will spend over $300 billion in that period, a move that will benefit vendors like AMD and NVIDIA. 

The AI industry has also been disrupted by DeepSeek, a Chinese company that has demonstrated that one can build advanced AI models using affordable and less advanced chips. 

Analysts expect that AMD’s business will maintain its steady growth this year. The estimate is that the revenue will grow by almost 30% in the first quarter, bringing the annual growth rate to 23.4% to $31.8 billion. It will then make over $38 billion in the next financial year.

AMD stock price analysis

The daily chart shows that the AMD share price has been in a strong downward trend in the past few months, as we predicted. It has remained below the 50-day and 200-day moving averages, leading to a death cross formation in November last year. 

The MACD indicator has moved below the zero line, while the Relative Strength Index (RSI) has formed a symmetrical triangle pattern. This triangle is nearing the confluence level.

On the positive side, the AMD stock price has formed a falling wedge chart pattern, a popular bullish reversal sign. Therefore, this pattern points to a strong rebound in the coming months to $174.12, up by 67% from the current level.

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Broadcom stock price has retreated sharply in the past few days as investors assess reports that it may be interested in acquiring part of Intel. AVGO has also dropped amid jitters that the artificial intelligence (AI) industry is slowing. It dropped to a low of $212 this week, down by about 15% from its highest level this year. 

Broadcom is interested in parts of Intel

The most important Broadcom stock news is that it is seriously considering a bid for some parts of Intel, a fallen angel that has become a shell of its former self. In this arrangement, Broadcom would take Intel’s chip design and marketing businesses, while Taiwan Semiconductor is considering its design factories.

Such a deal would likely make sense for Broadcom since it would give it access to Intel’s chip business that competes directly with the likes of NVIDIA and Broadcom. The challenge, however, is that Intel’s market share in the CPU and GPU industries is slowing, with top customers like Apple and Microsoft designing their chips internally. 

Still, it is unclear whether the United States government would greenlight such a deal for national security reasons. TSMC is a Taiwanese company that could be under pressure if China invades Taiwan. 

While Broadcom is registered as an American company, it was a Singapore entity until it changed its headquarter to the US.

Read more: Broadcom stock unique pattern points to AVGO hitting $200

AI demand concerns remain

Broadcom stock price has also come to the spotlight as concerns about the artificial intelligence industry remain. These concerns have escalated after China’s DeepSeek AI, which has shown that it is possible to build advanced AI models using less advanced chips.

NVIDIA’s earnings demonstrated that the AI industry is still doing well as companies like Microsoft and Amazon continue spending. However, the guidance was relatively weaker than expected. 

The most recent Broadcom earnings showed that its business was doing well, helped by its AI business. Its total revenue rose by 51% to $14 billion, partly because the figure included VMware. 

Its annual revenue rose by 44% to $51.6 billion, helped by its infrastructure software, which grew to $21.5 billion. Its semiconductor business, which includes its AI business rose to $30.1 billion.

Broadcom has been helped by the diversity of its business. It offers numerous services, including cybersecurity, which it offers through its Symantec brand. It also offers software solutions through its CA Technologies, which it bought for $18.9 billion. 

Analysts expect that Broadcom’s business will continue doing well as its growth momentum slows. The average estimate is that its revenue will grow by 21% to $14.6 billion in the current quarter, followed by $14.7 billion in the next one. The annual revenue will grow to $61.34 billion followed by $70.9 billion in the next financial year. 

These numbers mean that Broadcome is fairly overvalued since it has a forward P/E ratio of 33.4 and a market cap of over $1.06 trillion.

Broadcom stock price analysis

AVGO chart by TradingView

The daily chart shows that the AVGO share price formed a double-top pattern at $251, which explains why it has dropped sharply in the past few days. This retreat happened as the stock formed an island pattern, which is often a sign of a reversal.

It has moved below the 50-day moving average and is above the key support level at $185.55, the upper side of the ascending triangle pattern. Therefore, the most likely scenario is where the Broadcom stock price will retreat and retest the support at $185 and then resume the uptrend. 

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