2x leveraged AI server ETF SMCX plunges 22% as underlying SMCI stock drops amid AI demand concerns.

The Defiance Daily Target 2X Long SMCI ETF (SMCX), which uses swaps to double daily returns on Super Micro Computer (SMCI) stock, fell 22% on June 5, 2026, following an 11% drop in SMCI shares. This decline was driven by Broadcom's weaker-than-expected AI semiconductor revenue guidance and concerns over hyperscalers diversifying chip suppliers, which could reduce SMCI's market share. The leveraged ETF's structure causes it to magnify daily moves but suffer losses over time in volatile or downtrending markets, leading to a 67% loss over the past year despite SMCI's slight stock gains. Investors should view SMCX as a short-term trading vehicle rather than a long-term hold, especially given current market volatility and uncertain AI capital spending trends.