Nvidia Soars on Blockbuster Q2 earnings: ETFs to Buy
Nvidia NVDA reported solid second-quarter fiscal 2024 results, wherein it topped both earnings and revenue estimates. It also offered a bullish revenue outlook for the current quarter on booming artificial intelligence (AI) demand for its high-powered chips. This added to investor optimism.
Nvidia shares zoomed as much as 10% to a record high in after-market trading on elevated volume. This lifted NVDA stock’s market value by about $110 billion to more than $1.27 trillion, extending its lead as the world's most valuable chipmaker (read: Why to Buy Nvidia Even After 212% YTD Jump? ETFs in Focus).
Investors could tap the strength with the help of ETFs having the largest allocation to NVIDIA in focus. These include GraniteShares 1.5x Long NVDA Daily ETF NVDL, VanEck Vectors Semiconductor ETF SMH, AXS Esoterica NextG Economy ETF WUGI, Global X Robotics & Artificial Intelligence ETF BOTZ and Pacer Data and Digital Revolution ETF TRFK.
Nvidia Earnings in Focus
Earnings per share came in at $2.70, outpacing the Zacks Consensus Estimate of $2.09 and improving 429% from the year-ago earnings. Revenues climbed 101% year over year to a record $13.51 billion and edged past the consensus mark of $11.17 billion.
Nvidia is at the center of the artificial intelligence explosion, thanks to its high-powered graphics cards and server products. The robust result underscores the growing significance of the company’s graphics processing units (GPUs) for the generative AI boom.
Data center revenues surged 53.7% year over year to a record $10.3 billion, while gaming revenues rose 11% to $2.5 billion from a year ago.
For the third quarter of fiscal 2024, the graphics chipmaker expects revenues of around $16 billion, plus or minus 2%. This is much higher than the Zacks Consensus Estimate of $12.3 billion. The world’s largest chipmaker continues to benefit from the explosive demand for its cutting-edge chips used in AI applications, which are used to power ChatGPT and many similar services, and is boosting supply to meet surging demand. Nvidia's chips are used in applications ranging from robotics and the metaverse to medical imaging and video analytics
Nvidia CEO Jensen Huang said in a statement that "A new computing era has begun." "Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI."
Nvidia announced a new buyback program of $25 billion shares after the company purchased $3.28 billion in shares during the quarter. The move came as the shares of NVDA tripled this year, making the company the world’s ninth public company and the first chipmaker to ever hit the trillion level at the end of May (read: Nvidia Hits Trillion-Dollar Market Cap: 5 ETFs to Track).
ETFs in Focus
Let’s delve into each ETF below:
GraniteShares 1.5x Long NVDA Daily ETF (NVDL)
GraniteShares 1.5x Long NVDA Daily ETF magnifies exposure to a single trade, seeking 1.5 times (150%) the daily percentage change of the common stock of NVIDIA. It has an expense ratio of 1.15% and trades in a volume of 469,000 shares a day on average. GraniteShares 1.5x Long NVDA Daily ETF has amassed $252 million in its asset base.
VanEck Vectors Semiconductor ETF (SMH)
VanEck Vectors Semiconductor ETF offers exposure to companies involved in semiconductor production and equipment. SMH follows the MVIS US Listed Semiconductor 25 Index, which tracks the most liquid companies in the industry based on market capitalization and trading volume. VanEck Vectors Semiconductor ETF holds 26 stocks in its basket, with Nvidia occupying the top position at 21.1%.
VanEck Vectors Semiconductor ETF has managed assets worth $9.9 billion and charges 35 bps in annual fees and expenses. SMH is heavily traded with a volume of 6.8 million shares per day and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Tap These Stocks & ETFs to Play Like Billionaires).
AXS Esoterica NextG Economy ETF (WUGI)
AXS Esoterica NextG Economy ETF is an actively managed ETF that invests in stocks of companies that benefit from the ever-evolving digital economy. It holds 31 stocks in the basket, with Nvidia occupying the top position at 19.6%.
AXS Esoterica NextG Economy ETF has accumulated $21.9 million in its asset base and charges 75 bps in fees per year. It trades in an average daily volume of 2,000 shares.
Global X Robotics & Artificial Intelligence ETF (BOTZ)
Global X Robotics & Artificial Intelligence ETF follows the Indxx Global Robotics & Artificial Intelligence Thematic Index, which seeks investment in companies that stand to benefit from the increased adoption and utilization of robotics and AI, including those involved with industrial robotics and automation, non-industrial robots and autonomous vehicles (read: Guide to Artificial Intelligence ETFs).
Global X Robotics & Artificial Intelligence ETF has 43 stocks in its basket, with NVIDIA occupying the top spot with 14.8% share. The ETF has AUM of $2.1 billion and an average daily volume of 1.5 million shares. It charges 69 bps in annual fees.
Pacer Data and Digital Revolution ETF (TRFK)
Pacer Data and Digital Revolution ETF aims to offer investors exposure to the globally listed stocks and depositary receipts of data and digital revolution companies. It follows the Pacer Data Transmission and Communication Revolution Index, holding 81 stocks in its basket. Out of these, Nvidia is the top firm, accounting for an 11.1% share. Semiconductors take the largest share at 33.9%, while system software and communication equipment round off the next two spots.
Pacer Data and Digital Revolution ETF debuted in June last year and has accumulated $4.9 million in its asset base. It has an expense ratio of 0.60%. TRFK trades in a meager volume of under 3,000 shares per day on average.
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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
VanEck Semiconductor ETF (SMH): ETF Research Reports
Global X Robotics & Artificial Intelligence ETF (BOTZ): ETF Research Reports
AXS Esoterica NextG Economy ETF (WUGI): ETF Research Reports
Pacer Data and Digital Revolution ETF (TRFK): ETF Research Reports
GraniteShares 1.5x Long NVDA Daily ETF (NVDL): ETF Research Reports
