Trading activity centered on artificial intelligence is rapidly intensifying. According to EPFR data cited by Goldman Sachs, assets in leveraged ETFs tied to AI and technology themes have surged significantly in the U.S., South Korea, and Taiwan over the past two months, indicating that investors are using more aggressive tools to amplify their bets on the AI sector.
The U.S. scale has increased to $84 billion.
As of the end of May, the total net assets of U.S. leveraged equity ETFs rose to $84 billion, up from $39 billion in April. Goldman Sachs' data covers 573 U.S. leveraged equity ETFs.
Related products in the South Korea and Taiwan markets are also expanding simultaneously. Combined assets of leveraged stock ETFs in these two regions increased from $17 billion to $43.1 billion, covering 52 South Korea ETFs and 11 Taiwan ETFs.
Funds are concentrated in AI-weighted stocks.
This round of expansion is directly linked to the ongoing surge in AI trading. Outside the United States, AI supply chain heavyweights in South Korea and Taiwan have also become focal points for capital inflows.
In the South Korean market, SK Hynix and Samsung Electronics account for a significant weight in the KOSPI Composite Index. In the Taiwan market, TSMC holds a weighting of over 40% in the weighted index. Continued gains by these large-cap stocks will further amplify the capital attraction effect of leveraged products.
Fluctuations may be greater or more intense during callbacks.
Leveraged ETFs primarily amplify daily returns using derivatives, with some products enabling two or even three times the intraday price movement of the underlying index or stock. During favorable market conditions, these products tend to attract short-term capital; however, during market downturns, losses are similarly magnified.
Adam Crisafulli, founder of Vital Knowledge, said it is not uncommon for investors to chase leverage during bull markets, but AI trading currently shows signs of overheating. While AI is indeed driving significant revenue growth for many companies, the firms that are truly converting revenue into profits and cash flow remain largely concentrated among a few chip and storage companies.
Meanwhile, major tech companies continue to invest heavily in AI infrastructure. Alphabet, Microsoft, Meta, and Amazon are expected to collectively spend over $700 billion on capital expenditures this year. Wall Street analysts project that AI-related spending will exceed $1 trillion by 2027.