CBRS: The New Darling of AI Chips? An Article to Help Beginners Understand the Related Operations!

Today, a new ETF in the US stock market left me stunned again—$Leverage Shares 2X Long CBRS Daily ETF(CBRG.US) surged 20.7% in a single day, while the $Cerebras(CBRS.US) it tracks rose 10.4% over the same period. One is doubling the speed, the other is moving at a normal pace. It might look like some kind of mystery, but it boils down to one sentence: CBRG is a 2x long leveraged ETF on CBRS.

Cerebras Systems, an AI chip company that just IPO'd last week, makes "wafer-scale giant chips" (a single chip occupies an entire silicon wafer, with computing power per card comparable to 50+ H100s). It was added to Cathie Wood's portfolio on its first IPO day, and was included in the S&P 500 fast track just 5 days later. The market is trading it as the "second AI chip ticket after NVIDIA." The single share price is over two hundred dollars—not exactly high, but for some investors, stocks at this price point are still hard to stomach.

As a 2x long ETF, CBRG's daily unit price is only 4% of CBRS's ($10.49 vs $266.90), but its daily volatility is 2x that of CBRS. Today, CBRS was up 10.4%, and CBRG gave you +20.7%—the leverage relationship perfectly realized.

My judgment is: CBRS is indeed riding the wave this week, having risen over 40% in 5 days, and CBRG's +20% in a day matches that momentum. However, the analyst comment on 5/22 titled "I'm Not Chasing the Hype" also serves as a reminder—CBRS's valuation has already priced in orders for the next 3 years, and whether the pace of monetizing its technological lead can keep up with the stock price is a big question mark. So if you want to get on board with CBRG today, I personally would only allocate a maximum of 3% of my total portfolio, and the stop-loss must be set at -15% (meaning CBRS falls 7.5%). Leave at any sign of hesitation; don't talk about holding convictions with 2x leveraged products.

Here's also a quick explainer for newbie friends on how 2x leveraged ETFs work:

1. It only guarantees 2x daily, not 2x long-term. This means if CBRS rises 20% in a week, CBRG might not necessarily rise 40%; it could rise only 35%, or maybe 45%. The reason is that after the market closes each day, the fund rebalances its position to 2x. In a one-sided trending market, you'll earn a bit more than 2x (compounding gains), but in a volatile, choppy market, you'll earn significantly less than 2x (commonly known as "volatility decay").

2. It's only suitable for short-term trading, not for long-term holding. The probability of holding a 2x ETF for over half a year being more profitable than directly buying CBRS on margin is statistically only about 30%. This isn't a conspiracy theory; it's the mathematical inevitability of daily rebalancing.

3. Losses are also 2x on the downside. If CBRS falls 10% one day, CBRG directly falls 20%. This is why this type of ETF has always only belonged to the category of "short-term directional betting tools," not "value investing tools."

4. The essence of all 2x / 3x leveraged ETFs is the same: "short-term directional betting tool + high turnover + high volatility decay." They are not meant for buy-and-hold; they are for you to make intraday/weekly directional bets. Think this through clearly before you act.

Next, here are a few ways for retail investors to participate with low barriers:

Momentum-chasing type: If you're bullish on AI chips continuing to rise over the next 1-2 weeks but don't want to buy the underlying stock, you can buy a small position in CBRG as a gain amplifier. If buying today, remember to calculate the 2x risk clearly—CBRG is $10.49. If CBRS falls back to its IPO price of $50 (-81%) within a week, your position would essentially be wiped out, so don't let the position exceed 3-5% of your total capital.

Underlying stock substitute type: If you originally wanted to buy 5 shares of CBRS ($1335), you might as well buy 50 shares of CBRG ($524) + keep half the cash to add to the underlying stock on a pullback. This play retains upside elasticity while leaving a cash buffer.

Absolute taboo: Holding onto it for a long time, treating it as a long-term holding. CBRS hasn't been IPO'd for long, and volatility is currently high. The volatility decay of CBRG over a month could be more terrifying than a single-day decline.