As artificial intelligence continues to dominate market narratives, leveraged technology ETFs have drawn renewed attention from investors looking to magnify gains. Two of the most talked-about vehicles are ProShares’ ProShares Ultra QQQ (QLD) and Direxion’s Direxion Daily Semiconductor Bull 3X Shares (SOXL). Both promise amplified exposure to U.S. tech, but they do so in very different — and very risky — ways.

Leverage First, Risk Always

The most important distinction is leverage. QLD targets 2× the daily performance of the NASDAQ-100, while SOXL aims for 3× the daily performance of the U.S. semiconductor sector. That extra turn of leverage makes SOXL dramatically more volatile.

Over the past five years, SOXL’s maximum drawdown exceeded 90%, compared with about 64% for QLD. Even though SOXL can deliver eye-popping gains in strong bull runs, those gains come with the constant risk of capital erosion during periods of choppy or declining markets.

Both ETFs reset leverage daily, which means returns over longer holding periods can diverge significantly from what investors might expect based on simple index performance. In volatile markets, this “compounding effect” often works against long-term holders.

Diversification vs. Concentration

QLD offers broader exposure. It holds around 121 stocks, with technology making up roughly 53% of the portfolio, complemented by communication services (17%) and consumer cyclical names (13%). Heavyweights such as Nvidia, Apple, and Microsoft dominate the top of the holdings list.

SOXL, by contrast, is a pure semiconductor bet. It is 100% concentrated in chipmakers and related companies, including Micron Technology and Advanced Micro Devices. While individual positions are relatively small, the sector concentration makes SOXL highly sensitive to shifts in chip demand, inventory cycles, and AI capital spending trends.

Costs and Performance Trade-Offs

Expense ratios for both funds hover close to 1% annually, making costs a secondary consideration compared with risk. Dividend yields are negligible and identical, so income is not part of the investment case.

Despite SOXL’s higher one-year returns in strong semiconductor rallies, long-term compounding has favored QLD. Over five years, QLD turned a hypothetical $1,000 investment into roughly $2,370, outperforming SOXL once volatility and drawdowns are factored in.

What This Means for Investors

Both ETFs are tactical instruments, not buy-and-forget investments. QLD may appeal to investors who want leveraged exposure to the AI and mega-cap tech theme but prefer a broader base and relatively lower volatility. SOXL is better suited for traders with a strong, short-term conviction in semiconductors — and a high tolerance for sharp drawdowns.

In short, QLD trades diversification for slightly lower upside, while SOXL trades diversification for maximum torque. The better choice depends less on which ETF is “better” and more on how much risk an investor is truly prepared to absorb when chasing the AI boom.