Top Performing Leveraged/Inverse ETFs: 05/18/2025

Last week's top-performing leveraged ETFs saw significant gains, driven by factors including easing US-China trade tensions, strong earnings reports, and sector-specific tailwinds. The Defiance Daily Target 2X Long SMCI ETF (SMCX) led with a 97.90% return, fueled by Super Micro Computer's data-center deal and server shipments, while GraniteShares 2x Long COIN Daily ETF (CONL) gained 68.12% following Coinbase's inclusion in the S&P 500. Several other leveraged ETFs focusing on Tesla, Nvidia, semiconductors, and innovation also posted substantial returns, reflecting broader market optimism and specific company successes.

Analysis

Last week showcased substantial returns in several leveraged exchange-traded funds (ETFs), underscoring the amplified impact of specific catalysts on these instruments. The Defiance Daily Target 2X Long SMCI ETF (SMCX) led with a 97.90% return, primarily driven by Super Micro Computer's (SMCI) significant $20 billion data-center deal, new server shipments, and positive sentiment from easing US-China trade tensions. The GraniteShares 2x Long COIN Daily ETF (CONL) followed with a 68.12% gain, largely due to Coinbase's (COIN) announced inclusion in the S&P 500, which also signaled a more favorable outlook for the cryptocurrency sector. Other notable leveraged ETFs experiencing strong upside included those tracking Hims & Hers Health (HIMZ), which returned 49.21% on robust first-quarter results and an improved annual outlook; Tesla (TSLL), up 35.98% attributed to CEO commentary and post-earnings momentum despite underlying weak sales figures; and Nvidia-focused funds (NVDL, NVDU), which gained over 33% following a US-China tariff agreement, news of an AI chip supply deal with Saudi Arabia, and the CEO's announcement of an open system for AI chipmakers. Sector-specific tailwinds were also prominent, with the Direxion Daily Semiconductor Bull 3x Shares (SOXL) rising 30.33% due to eased AI chip regulations and broad optimism for semiconductor growth, while technology-centric ETFs like MicroSectors Solactive FANG & Innovation 3X Leveraged ETN (BULZ) advanced 28.51%, benefiting from AI enthusiasm and a favorable April inflation report. Even broader market sentiment, reflected in the Direxion Daily S&P 500 High Beta Bull 3X Shares (HIBL) gaining 27.78%, was buoyed by constructive developments in US-China trade relations. The performance across these funds highlights the critical role of company-specific news, sector trends, and macroeconomic factors, magnified by the inherent leverage of these ETFs, which are designed for rapid price movements.

Key Decisions for Investors

• Recognize the extreme volatility and inherent risks associated with leveraged ETFs; past strong performance, such as the 97.90% weekly gain in SMCX, does not guarantee future results and these instruments are designed for short-term trading.
• Closely monitor company-specific catalysts, such as major contracts for SMCI or index inclusions for COIN, alongside sector-specific trends in AI and semiconductors, which have been primary drivers for the underlying stock movements.
• Stay vigilant regarding macroeconomic factors, particularly US-China trade developments and inflation data, as these have shown a clear influence on overall market sentiment and the performance of the highlighted high-beta and technology-focused ETFs.