With so much of the business media ecosystem focused solely on artificial intelligence, it was practically inevitable that the Solactive US AI & Big Data Index would rank among the most heavily watched benchmarks. Fundamentally, generative AI and deep learning protocols are forcing a global paradigm shift, subsequently raising the valuations of sector players. At the same time, concerns of an unsustainable bubble have also echoed across Wall Street.
At the center of the bullish argument for AI and big data in general is that these two innovations represent one of the most disruptive technologies. Notably, AI adoption is broadening everywhere, from cloud computing to autonomous systems to enterprise-level software as a service. Further, big data analytics power AI training and business insights, expanding revenue growth potential across sectors.
Even better, analysts project rapid expansion in digital intelligence over the next decade, primarily driven by enterprise AI deployments, generative AI, cybersecurity, automation and personalized services. Even individual leaders in the space — perhaps most notably Nvidia Corp. (NASDAQ:NVDA) — continue to invite analyst optimism, even though NVDA already commands a rich premium.
Further, it's worth mentioning that the surge in AI demand is sparking an upstream effect in the energy sector. Thanks to the expansion of machine learning, the first-order requirement is computing power — graphics processors, data centers, models, training cycles. These protocols consume massive electricity and require wholesale upgrades in energy infrastructure, which is a contemporary development.
Still, not everything appears conducive toward sustained optimism. In recent months, several experts have sounded the alarm about a potential AI bubble. Essentially, the argument states that tech valuations have outpaced what buyers can realistically support. Given this apparent divorce between price discovery and core fundamentals, a correction might occur — and it could be severe.
Such anxieties extend beyond theoretical musings. Recently, shares of Oracle Corp. (NYSE:ORCL) plunged during the midweek session's afterhours trading. Investors took a dim view of the software giant's mixed second-quarter results, where the company beat on earnings but fell short of revenue estimates. Plus, the timing couldn't be worse, with the tech sector attempting to rebuild from sector jitters that started in late October.
The Direxion ETFs: With market data providing both sides with ample arguments, this environment is especially geared for AI-focused exchange-traded funds. Specifically, bullish investors may consider the Direxion Daily AI and Big Data Bull 2X Shares (NYSE:AIBU). For those who are feeling pessimistic about the tech arena, the Direxion Daily AI and Big Data Bear 2X Shares (NYSE:AIBD) could be of interest.
According to the financial service provider's website, the AIBU ETF seeks the daily investment results, before fees and expenses, of 200% of the performance of the aforementioned Solactive index. On the other end, the AIBD ETF seeks 200% of the inverse performance of said benchmark.
At the core, both ETFs offer convenience for retail traders who seek the specialized characteristics of leveraged or bearish trades. Generally, those interested in advanced trading strategies would have to resort to options trading, which may introduce unique risks and complexities. With Direxion ETFs, traders can buy and sell the underlying units, much like any other publicly traded asset.
However, it's worth noting that leveraged and inverse ETFs are designed for exposure lasting no longer than one day. Anything beyond this recommended hold may encounter unexpected performance drags due to the daily compounding of volatility.
The AIBU ETF: Unsurprisingly given the enormous interest in AI, the AIBU ETF has gained 55% since the beginning of January. In the trailing half-year period, the bull fund is up 48%.
- Although AIBU has been climbing out of its November hole, the price action currently appears to be stymied by the 50-day moving average.
- For the bulls, the next natural target would be psychologically significant $60 level. However, somewhat fading volume represents a concern to watch closely.
The AIBD ETF: Given the tremendous gains of machine intelligence, the AIBD ETF has been unsurprisingly poor, losing 55% since the start of the year.
- Throughout most of 2025, the 50 daily moving average, along with the 20-day exponential moving average, have imposed upside resistance against AIBD.
- However, acquisition volume has spiked sharply in November, followed by an uptick in momentum. Potentially, this could signal a shift in sentiment.
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