Chip Boom, Not Crypto: A Tale of AI Cash Flows

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Folks with pockets full of nerves and numbers have named semiconductor exchange-traded funds the hottest trade of 2026, while the crypto ETFs drift on a lighter current. The chip funds have drawn about $3.2 billion in net retail buying since January 2025, as if the kettle suddenly boiled over on a quiet stove.

The Kobeissi Letter, reading the ledger of JPMorgan’s street, through April 29, 2026, tells a tired story with a hopeful wink: retail buying has more than doubled in 2026 alone, a stubborn shift toward AI stocks, like a new conscience in the market’s old heart.

AI Capex Supercycle Powers the Move

Hyperscalers such as Microsoft, Amazon, Alphabet, Meta, and Oracle have laid out 2026 capital expenditures of $600 billion to $720 billion, says Kobeissi, as if the world’s data towns were growing a new, gleaming cathedral.

The figure marks a 36% to 70% year-over-year rise. About 75% of that spend funds AI infrastructure-the backbone where silicon dreams become machines that think, and think aloud in spreadsheet bravura.

Global semiconductor revenue could top $1.3 trillion in 2026, the largest annual leap in two decades. Memory chips remain in short supply because AI workloads drink high-bandwidth memory at scale, like thirsty travelers at a desert spring.

Producers like Micron, Nvidia, and Taiwan Semiconductor Manufacturing Company (TSMC) all stand to benefit, like farmers at harvest time seeing the sun rise in their granaries.

Liquid cooling and efficiency upgrades have unlocked even larger data center builds across the United States and Asia, as if the machines learned to sweat so the towns could stay cool.

Hottest Trade Twist Crypto Did Not Catch

In April 2026, two major chip funds absorbed about $5.5 billion in inflows. The VanEck Semiconductor ETF (SMH) and the iShares Semiconductor ETF (SOXX) split the record monthly haul, like two rivers agreeing to kiss at the valley.

Individual investors are piling into semiconductor ETFs at a historic pace:

Since January 2025, retail investors have purchased a net +$1.0 billion of the Semiconductor ETF, $SMH.

Over the same period, retail purchases in the 3x leveraged short semiconductor ETF, $SOXS, have…

– The Kobeissi Letter (@KobeissiLetter) May 3, 2026

April flows beat the prior record set in December 2025. The Philadelphia Semiconductor Index (SOX) climbed about 38.7% over the same stretch, as if the town woke up to the sound of marching drums.

Crypto ETFs have not kept pace. Bitcoin (BTC) spot funds drew near $2 billion in April inflows, while Ethereum (ETH) products posted weaker or negative numbers, like a raincloud over a sunlit street.

Year-to-date returns for many crypto ETFs sit flat or lower. Bitcoin slid about 20% earlier in April before recovering, as if the town remembered its vow to stay stubbornly practical.

Leveraged Bets Signal Caution

Retail buying flows in both directions. The Direxion Daily Semiconductor Bull 3X ETF (SOXL) and its bear twin (SOXS) traded a combined 330 million shares per day, like saws in a workmen’s shed.

The volume marked a 16-month high. SOXL volume topped 99% of weekly readings over the past five years. The split suggests traders hedge exposure as well as chase upside, a foolish hope and a cautious whisper in the same pocket.

Retail investors are piling into leveraged semiconductor ETFs at an unprecedented pace:

Combined daily trading volume in the 3x leveraged short semiconductor ETF, $SOXS, and the 3x leveraged long semiconductor ETF, $SOXL, has surged to ~330 million shares, the highest in at…

– The Kobeissi Letter (@KobeissiLetter) April 30, 2026

Leveraged products carry meaningful decay in choppy markets. Hyperscaler earnings in the coming weeks will test whether AI capex guidance holds. The hottest trade in 2026 still wears a chip’s grin, not coins’ glitter.

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2026-05-03 22:46