The tech sector’s struggles early in 2025 are well-documented. But those doldrums rapidly gave way to bullish sentiment that’s carried gauges such as the Nasdaq-100 (NDX) and the S&P Technology Select Sector indexes to or close to new highs.
There are a few reasons market participants remain enthusiastic about growth and technology stocks. One is clarity from the White House on some of trade tariff plans. Another is bets that the Federal Reserve may soon have to lower interest rates. The AI trade, one fortified by recent gains by the related stocks, only fuels that fire. And it could be additive for the short-term cases for leveraged ETFs such as the Direxion Daily Technology Bull 3X ETF (TECL) and the Direxion Daily Semiconductor Bull and 3X Shares (SOXL).
TECL attempts to deliver 300% of the daily returns of the aforementioned Technology Select Sector indexes. SOXL endeavors to deliver 300% of the daily performance of the NYSE Semiconductor Index. These two funds can be ideal tools for risk-tolerant short-term traders looking to capitalize on bullish move by AI and tech stocks.
SOXL, TECL May Have Tailwinds
SOXL and TECL geared ETFs. So traders need to keep sharp eyes on these funds while not turning trades into long-term investments. Fortunately, there may be favorable factors at play that could propel the Direxion ETFs over the near term.
“As we have gained more clarity on tariffs, and more importantly, more confidence in the economy’s resilience, investors have rotated back into longer-term secular themes, notably artificial intelligence (AI), software, semiconductors and power generation,” according to BlackRock.
One of the most widely cited factors against the case for continued AI/tech equity upside is lofty valuations. But that’s not keeping market participants away. Plus, as BlackRock noted, relative valuations in the space are hovering around five-year averages. That could be a sign it won’t be valuation that dents the cases for SOXL and TECL.
Further enhancing the case for SOXL and TECL are the following points. Tech profit margins are sturdy. Also, the sector is forecast to be a leader in terms of global profits and revenue growth.
“Elevated growth valuations are arguably justified based on profitability, margins and still stellar earning growth,” added BlackRock. “We continue to live in a world in which mega-cap tech companies remain remarkably profitable, and despite large capital-spending plans, capable of driving strong earnings growth. On a global basis, the MSCI World tech sector is expected to lead the rest of the market in both earnings and sales growth.”
For more news and information, visit the Leveraged & Inverse Content Hub.
