ETFs
AI boom bolsters NVIDIA’s Q1 growth: ETFs to exploit
NVIDIA NVDA reported blockbuster results for the first quarter of fiscal 2025, once again fueling broad optimism in the stock market. It beat earnings and revenue estimates and offered a bullish revenue outlook for the current quarter, thanks to strong demand for its artificial intelligence (AI)-enabled GPU chips.
NVIDIA shares jumped as much as 7.8% in after-market trading following strong results and surpassed the $1,000 level for the first time ever. Investors can exploit the robust growth with the help of ETFs with the largest allocation to NVIDIA. These are Strive US Semiconductor ETF SHOCK, VanEck Vectors Semiconductor ETF SMH, Grizzle Growth ETF DARP, TrueShares Technology, AI and Deep Learning ETF LRNZ and Invesco PHLX Semiconductor ETF SOXQ.
Close-up on NVIDIA’s results
Earnings per share came in at $6.12, easily beating the Zacks Consensus Estimate of $5.49 and up a staggering 461% from the year-ago quarter. Revenue jumped 262% year over year to a record $26.04 billion and surpassed the consensus mark of $24.33 billion.
The blockbuster results were driven by incredible demand for NVIDIA’s power circuits, known as graphics processing units (GPUs), and data centers. Data center revenue jumped 427% year over year to a record $22.6 billion, driven by strong and accelerating demand for generative AI training and inference on the Hopper platform (read: Technology ETFs ahead of NVIDIA profits).
NVIDIA has been at the forefront of tech companies’ race to integrate AI into their products and services. NVIDIA Founder and CEO Jensen Huang said: “The next industrial revolution has begun: Companies and countries are partnering with NVIDIA to move traditional, trillion-dollar data centers to the accelerated computing and build a new type of data center – AI factories – to produce a new commodity: artificial intelligence.
For the second quarter of fiscal 2025, the graphics chip maker expects revenue of around $28 billion, plus or minus 2%. This is higher than the Zacks Consensus Estimate of $26.24 billion. The world’s largest chipmaker continues to expect strong sales even as customers wait for its next-generation GPU chip, Blackwell, which is expected to be released in the second half of the year.
To tap into the booming demand for AI, NVIDIA announced a 10-for-1 stock split, effective June 7. The move will make the stock more accessible to investors and employees and attract individual investors who make small transactions. In effect, a stock split creates more shares of a company without changing the underlying monetary value of an individual investor’s holdings. By increasing the number of shares available, the company can attract new investors who otherwise would not be able to afford a single share at a high price.
The AI chipmaker also increased its quarterly dividend by 150%, from 4 cents per share to 10 cents per share. The new dividend will be paid on June 28 to shareholders starting June 11 (read: Reduced rate or no reduced rate, dividend ETF you should buy).
The story continues
ETF to exploit
Let’s take a look at each ETF below:
Strive US Semiconductor ETF (SHOC)
The Strive US Semiconductor ETF seeks broad market exposure to the US semiconductor sector. It tracks the Bloomberg US Listed Semiconductors Select Total Return Index and holds 32 stocks in its basket, with NVIDIA accounting for the top company at 27% (read: What You Need to Know About NVIDIA ETFs Ahead of Earnings).
The Strive US Semiconductor ETF has $65.3 million in assets under management and charges 40 basis points in annual fees. It trades an average volume of 13,000 shares per day and has a Zacks ETF Rank #2 (Buy).
VanEck Vectors Semiconductor ETF (SMH)
The VanEck Vectors Semiconductor ETF provides exposure to companies involved in semiconductor production and equipment. It tracks the MVIS US Listed Semiconductor 25 Index, which tracks the most liquid companies in the industry based on their market capitalization and trading volume. VanEck Vectors Semiconductor ETF holds 26 stocks in its basket, with NVIDIA holding the top position at 20.8%.
VanEck Vectors Semiconductor ETF has managed assets worth $20 billion and charges 35 basis points in annual fees and expenses. SMH has a Zacks ETF Rank #1 (Strong Buy) with a High Risk outlook.
Grizzle Growth ETF (DARP)
Grizzle Growth ETF is an actively managed ETF that seeks long-term capital appreciation through companies focused on growth, innovation and disruption. It seeks to identify future leaders in key growth themes including digitalization and cloud computing, future media and entertainment, health and well-being, and sustainability and energy transition. Grizzle Growth ETF holds 41 stocks in its basket, with NVIDIA holding the top position with 19.8% of assets.
Grizzle Growth ETF has accumulated $13.7 million in its asset base and charges 75 basis points in annual fees.
TrueShares Technology, AI & Deep Learning ETF (LRNZ)
TrueShares Technology, AI and Deep Learning ETF is an actively managed fund targeting companies heavily involved in the application of high levels of artificial intelligence. It holds 24 stocks in its basket, with NVIDIA taking first place with 13.7% share.
LRNZ has amassed $41.3 million in assets and trades an average daily volume of 9,000 shares. It charges 69 basis points in fees per year.
Invesco PHLX Semiconductor ETF (SOXQ)
The Invesco PHLX Semiconductor ETF provides exposure to the largest U.S.-listed securities of companies active in the semiconductor industry. It tracks the PHLX Semiconductor Sector Index, holding 30 stocks in its basket. NVIDIA takes first place with a 13.4% share in the basket.
The Invesco PHLX Semiconductor ETF has accumulated $401.8 million in its asset base. It charges 19 basis points in annual fees and trades an average daily volume of 205,000 shares. The Invesco PHLX Semiconductor ETF has a Zacks ETF Rank #1.
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NVIDIA Corporation (NVDA): Free Stock Analysis Report
VanEck Semiconductor ETF (SMH): ETF Research Reports
TrueShares Technology, AI & Deep Learning ETF (LRNZ): ETF Research Reports
Invesco PHLX Semiconductor ETF (SOXQ): ETF Research Reports
Strive US Semiconductor ETF (SHOC): ETF Research Reports
Grizzle Growth ETF (DARP): ETF Research Reports