AI Angles Are Awesome for this Leveraged ETF

Taiwan Semiconductor Manufacturing (TSM) delivered strong results last week while telling investors it expects 2026 sales to surge 30%, confirming the theme of artificial intelligence (AI) spending is alive and well. The world’s largest semiconductor foundry operator also signaled robust margin expansion.

Those points, along with an array of other factors, point to 2026 upside for shares of Taiwan Semiconductor, indicating there will be occasions when aggressive short-term traders can use the Direxion Daily TSM Bull 2X Shares (TSMX). That ETF is designed to deliver 200% of the daily returns of the underlying stock.

While the company’s most recent financial update is now in the rearview mirror, traders shouldn’t ignore the geared TSMX because the stock could have pleasant surprises in store for investors over the course of 2026.

“Management’s track record of conservative guidance, plus its thinly veiled reference to the benefits of an indirect customer firm (Meta Platforms), boosts our confidence that Taiwan Semiconductor will incur TWD 8.8 trillion in sales by 2029, or 23.3% 2025-29 CAGR,” notes Morningstar analyst Phelix Lee.

More Reasons TSMX Is Tempting

As Lee points out, there’s increasing clarity around AI spending, including from bellwether enablers and hyperscalers such as Broadcom (AVGO) and Alphabet (GOOGL). The removal of uncertainty may give investors confidence that Taiwan Semi’s 2026 outlook isn’t just attainable; it’s potentially beatable, which could give rise to TSMX.

“We increase our fair value estimate for Taiwan Semiconductor to TWD 2,700 from TWD 1,900 ($428 per ADR from $310) on higher expectations of durable AI spending. We believe the market is skeptical of how specialized chips can complement more versatile Nvidia chips,” says the Morningstar analyst.

Regarding other factors that have sparked chip stock and thus the Direxion ETF this year, there appears to be a thaw in US/China relations that could open the door for some Taiwan Semi customers to ship critical AI chips to China.

“We are more bullish in China AI demand, as Nvidia has secured export licenses in the United States and Chinese AI firms thirst for the most power-efficient chips made on Taiwan Semiconductor processes,” says Lee.

Bottom line: Taiwan Semiconductor’s guidance implies a strong year ahead for chip stocks, which brings opportunity with leveraged ETFs, including the Direxion Daily AMD Bull 2X Shares (AMUU) and the Direxion Daily MU Bull 2X (MUU), among others.

For more news and information, visit the Leveraged & Inverse Content Hub.