AMDL: Leveraged Exposure to AMD in a Volatile Market

The GraniteShares 2x Long AMD Daily ETF (AMDL) offers investors a high-risk, high-reward vehicle to amplify exposure to Advanced Micro Devices (AMD) in volatile markets. Designed to deliver twice the daily performance of AMD stock, AMDL leverages swap agreements and debt to achieve its 2x leverage, but this structure introduces unique risks that demand careful consideration. As markets grapple with geopolitical tensions, regulatory shifts, and sector-specific volatility, AMDL's role as a tactical tool-and its inherent dangers-warrant scrutiny.

Structure and Inherent Risks

AMDL operates as a leveraged single-stock ETF, a niche product category that magnifies both gains and losses. According to GraniteShares' report, the ETF has an expense ratio of 0.99% to 1.15%, reflecting the costs of maintaining its leveraged position. However, its daily rebalancing mechanism-a hallmark of leveraged ETFs-introduces compounding effects that can erode returns over time. For instance, if AMD's stock fluctuates significantly within a single trading day, AMDL's performance may deviate from the intended 2x exposure. This volatility drag is particularly pronounced during prolonged downturns, where daily losses compound exponentially.

The risks are further amplified by AMD's own volatility. As a semiconductor stock, AMD is sensitive to macroeconomic trends, regulatory changes, and technological disruptions. For example, recent export restrictions temporarily limited AMD's revenue potential, while structural issues in competitors' products (e.g., Nvidia's GPU reliability concerns) created opportunities for AMD to gain market share. Yet, these dynamics also mean AMDL's performance is tied to both the company's fundamentals and broader market sentiment.

Historical Context and Performance Gaps

While AMDL was launched in March 2024, historical data on its predecessor products and similar leveraged ETFs provides insight into its potential behavior. During the 2020 market crash, leveraged ETFs targeting individual stocks often underperformed due to liquidity constraints and compounding decay. Similarly, the 2025 tariff selloff-triggered by U.S. trade policy announcements-exacerbated volatility across equities, with low-volatility stocks outperforming in March and April. Although AMDL did not exist during these events, its structure suggests it would have faced significant challenges in such environments.

A critical factor is AMD's own performance. From 2023 to 2025, AMD reported a 32% year-over-year revenue increase, driven by gaming and data center growth. However, leveraged ETFs like AMDL are not immune to overvaluation risks. If AMD's stock becomes perceived as overpriced relative to peers like Nvidia, AMDL's value could decline rapidly, even if the underlying company remains fundamentally strong.

Tactical Use and Expert Strategies

Despite these risks, AMDL can serve as a tactical tool for short-term traders. Morningstar's analysis of 2025 market volatility highlights the importance of factor investing, particularly low-volatility and defensive strategies. While AMDL is not a low-volatility instrument, it aligns with the "quality" and "momentum" factors-both of which underperformed during the 2025 selloff. This underscores the need for disciplined risk management when deploying AMDL.

Experts recommend using AMDL for intraday or overnight trades rather than long-term holdings. For example, AMD's recent regulatory approval to resume shipments of its Instinct MI308 chips-a catalyst for potential price appreciation-could justify a short-term leveraged bet. However, investors must monitor AMD's stock closely, as even a 10% decline in AMD would translate to a 20% loss in AMDL.

AllianceBernstein emphasizes the importance of staying invested during recovery phases, noting that missing the best five days of market rebounds can significantly impair returns. This principle applies to AMDL as well: capturing AMD's upward swings requires precise timing, but holding the ETF during downturns could lead to disproportionate losses.

Conclusion: Balancing Risk and Reward

AMDL's 2x leverage makes it a potent tool for capitalizing on AMD's growth, but its risks are magnified in turbulent markets. The compounding effects of daily rebalancing, AMD's sector-specific volatility, and the absence of long-term stability make AMDL unsuitable for most investors. Instead, it should be reserved for experienced traders with a deep understanding of leveraged products and a strict exit strategy.

For those willing to navigate these challenges, AMDL offers a unique opportunity to leverage AMD's resurgence-provided they remain vigilant about the risks. As the semiconductor industry evolves and regulatory landscapes shift, AMDL's performance will hinge on both the company's trajectory and the investor's ability to manage volatility.