Editor's note: Any and all references to time frames longer than one trading day are for purposes of market context only, and not recommendations of any holding time frame. Daily rebalancing ETFs are not meant to be held unmonitored for long periods. If you don't have the resources, time or inclination to constantly monitor and manage your positions, leveraged and inverse ETFs are not for you.

Investing in the funds involves a high degree of risk. Unlike traditional ETFs, or even other leveraged and/or inverse ETFs, these leveraged and/or inverse single-stock ETFs track the price of a single stock rather than an index, eliminating the benefits of diversification. Leveraged and inverse ETFs pursue daily leveraged investment objectives, which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying stock’s performance over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. The Funds will lose money if the underlying stock’s performance is flat, and it is possible that the Bull Fund will lose money even if the underlying stock’s performance increases, and the Bear Fund will lose money even if the underlying stock’s performance decreases, over a period longer than a single day. Investing in the Funds is not equivalent to investing directly in NVDA.

It’s been a rollercoaster ride for shares of NVIDIA Corporation (Ticker: NVDA) year-to-date. After posting a new all-time high back on January 7 at 153.12, the name experienced a sharp pullback, dropping over 40% to its April 7 low at 86.62. The stock has staged an impressive recovery off the low, and now is encroaching its former high. Although, that rally has coincided with relatively low volume suggesting that caution remains (along with a ton of cash on the sidelines) as traders seek clarity on the impacts of tariffs and trade policy. With earnings now in the rearview mirror, what could be the next catalysts be for additional upside or a reversal back lower?

Can NVDA Expand Beyond the AI Frontier?

Nvidia’s business model has evolved significantly beyond its origins in graphics processing. The company is famous for its high-performance GPUs (GeForce, DGX, and H100), AI accelerators, and software platforms like CUDA. Over the years, Nvidia has cemented its dominance in data centers, gaming, artificial intelligence, and autonomous vehicles.

They’ve also diversified revenue streams extensively. Between data center solutions, gaming, professional visualization, and automotive chips, this positions Nvidia for robust long-term growth in the expanding AI, cloud, and computing markets. This could all continue to drive significant increases in its bottom line.

In the meantime, traders will want to keep monitoring the trade situation between the United States and China. The 90-day tariff pause expires on August 12, but if a deal is struck before then, it could lead to further winds in the sails of the bulls in Nvidia.

Traders anticipating continued upward momentum in NVDA may find a trade with Direxion’s Daily NVDA Bull 2X Shares (Ticker: NVDU), which seeks daily investment results, before fees and expenses, of 200% of the performance of NVIDIA Corporation common stock (Ticker: NVDA).

Below is a daily chart of NVDA as of May 22, 2025.

Source: TradingView.com

Candlestick charts display the high and low (the stick) and the open and close price (the body) of a security for a specific period. If the body is filled, it means the close was lower than the open. If the body is empty, it means the close was higher than the open.

The performance data quoted represents past performance. Past performance does not guarantee future results.

Tariff Tantrum and Competition Risks

Nvidia’s dominance in AI, data centers, gaming, and autonomous vehicles has driven its rise to dominance, but as always, risks lurk in the background. The company’s heavy reliance on AI GPU demand faces challenges from market saturation, as competitors like Advanced Micro Devices and Intel scale up AI chip production.

Plus, there are still risks of U.S. export controls on AI chips to China, which could cut up to $2.5 billion throughout the year. There’s also the risk of potential supply chain disruptions from President Trump’s April 2025 tariffs, which could erode Nvidia’s margins and international growth.

There are also macroeconomic pressures stemming from inflationary threats and higher interest rates. This could squeeze demand for NVIDIA’s high-cost chips across gaming, automotive, and enterprise segments. A hotter-than-expected inflation report on June 11 could further dampen investor sentiment, making NVDA vulnerable to another correction.

In this scenario, Direxion’s Daily NVDA Bear 1X Shares (Ticker: NVDD), which seeks daily investment results, before fees and expenses, of 100% of the inverse performance in common shares of Nvidia Coproration (Ticker: NVDA) could see a solid bid.

*Definitions and Index Descriptions

An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.

The Funds have derived all disclosures contained in this document regarding NVIDIA Corporation from publicly available documents. In connection with the offering of each Fund’s securities, neither the Funds, the Trust, nor the Adviser or any of its respective affiliates has participated in the preparation of such documents. Neither the Funds, the Trust nor the Adviser or any of its respective affiliates makes any representation that such publicly available documents or any other publicly available information regarding NVIDIA Corporation is accurate or complete. Furthermore, the Funds cannot give any assurance that all events occurring prior to the date hereof (including events that would affect the accuracy or completeness of the publicly available documents described above) that would affect the trading price of NVIDIA Corporation have been publicly disclosed. Subsequent disclosure of any such events or the disclosure of or failure to disclose material future events concerning NVIDIA Corporation could affect the value of a Fund’s investments with respect to NVIDIA Corporation and therefore the value of the Funds.

Direxion Shares Risks – An investment in a Fund involves risk, including the possible loss of principal. Each Fund is non-diversified and includes risks associated with a Fund concentrating its investments in a particular security, industry, sector, or geographic region which can result in increased volatility. A Fund’s investments in derivatives such as futures contracts and swaps may pose risks in addition to, and greater than, those associated with directly investing in securities or other investments, including imperfect correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility and lack of availability. As a result, the value of an investment in a Fund may change quickly and without warning.

Leverage Risk – The Bull Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with NVDA and may increase the volatility of the Bull Fund.

Daily Correlation Risk – A number of factors may affect the Bull Fund’s ability to achieve a high degree of correlation with NVDA and therefore achieve its daily leveraged investment objective. The Bull Fund’s exposure to NVDA is impacted by NVDA’s movement. Because of this, it is unlikely that the Bull Fund will be perfectly exposed to NVDA at the end of each day. The possibility of the Bull Fund being materially over- or under-exposed to NVDA increases on days when NVDA is volatile near the close of the trading day.

Daily Inverse Correlation Risk – A number of factors may affect the Bear Fund’s ability to achieve a high degree of inverse correlation with NVDA and therefore achieve its daily inverse investment objective. The Bear Fund’s exposure to NVDA is impacted by NVDA’s movement. Because of this, it is unlikely that the Bear Fund will be perfectly exposed to NVDA at the end of each day. The possibility of the Bear Fund being materially over- or under-exposed to NVDA increases on days when NVDA is volatile near the close of the trading day.

NVIDIA Corporation Investing Risk – NVIDIA Corporation faces risks associated with meeting the evolving needs of its large markets – gaming, data center, professional visualization and automotive – and identifying new products, services and technologies; competition in its current and target markets; changes in customer demand; supply chain issues; manufacturing delays; potential significant mismatches between supply and demand giving rise to product shortages or excessive inventory; the dependence on third-parties and their technology to manufacture, assemble, test, package or design its products which reduces control over product quantity and quality, manufacturing yields, development, enhancement and product delivery schedules; significant product defects; international operations, including adverse economic conditions; impacts from climate change, including water and energy availability; business investment and acquisitions; system security and data protection breaches, including cyberattacks; business disruptions; a limited number of customers; the ability to attract, retain and motivate executives and key employees; the proper function of its business processes and information systems; its intellectual property; and other regulatory and legal issues.

Semiconductor Industry Risk – Semiconductor companies may face intense competition, both domestically and internationally, may have limited product lines, markets, financial resources or personnel and may face risks related to the availability of materials.

Information Technology Sector Risk – The value of stocks of information technology companies and companies that rely heavily on technology is particularly vulnerable to rapid changes in technology product cycles, rapid product obsolescence, government regulation, and competition, both domestically and internationally, including competition from competitors with lower production cost.

Additional risks of each Fund include Effects of Compounding and Market Volatility Risk, Derivatives Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Industry Concentration Risk, Market Risk, Indirect Investment Risk, and Cash Transaction Risk. Additionally, for the Direxion Daily NVDA Bear 1X Shares, Shorting or Inverse Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of a Fund.

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