ETFs
ETFs should gain again
NVIDIA NVDA has seen solid growth, with no signs of slowing, thanks to the wave of continued investments in artificial intelligence (AI) and blockbuster earnings. Its shares closed above the $1,100 mark for the first time ever.
Last listed at $1,139, the AI chipmaker, the world’s third-most valuable company, is just $100 billion in market value away from overtaking Apple AAPL in a major shakeup of the biggest players on Wall Street. NVIDIA’s market capitalization reached $2.8 trillion, compared to a market value of $2.9 trillion for Apple, the second most valuable company after Microsoft MSFT.
Investors looking to tap into robust growth might consider ETFs to have the largest allocation to this darling AI stock. 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.
AI boom
NVIDIA has been at the forefront of technology companies rushing 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.
The latest catalyst driving NVIDIA is the multibillion-dollar funding of Elon Musk’s artificial intelligence startup. Elon Musk announced that AI startup xAI’s supercomputer will run on NVIDIA technology (read: Why you should buy AI and chip ETFs after NVIDIA earnings).
NVIDIA’s next-generation Blackwell GPU chip is expected to generate a massive new wave of growth for the chipmaker, along with its CUDA software platform and exposure to the automotive market. Investors applauded CEO Jensen Huang’s comments regarding their latest chip, Blackwell, which is expected to launch in the second half of the year.
Skyrocketing profits
Last week, NVIDIA reported stellar results for the first quarter of fiscal 2025, in which it beat both earnings and revenue estimates and offered a bullish revenue outlook for the current quarter, thanks to to robust demand for its artificial intelligence (AI)-enabled GPU chips. Its data center revenue soared 427% year-over-year to a record $22.6 billion, driven by rapid adoption of AI technologies (read: AI Boom Strengthens NVIDIA’s growth in the first quarter: ETFs to exploit).
Stock split: a big boost
The chipmaker announced a 10-for-1 stock split, effective June 7, and increased its quarterly dividend by 150%, to 10 cents per share. The stock split has sparked a retail trading frenzy because it will make NVIDIA shares more accessible to a wider range of investors, including those making small trades, and increase liquidity. Additionally, this will likely pave the way for the company’s inclusion in the Dow Jones Industrial Average.
Additionally, the drop in price could pave the way for the company’s inclusion in the Dow Jones Industrial Average. Amazon AMZN joined the Dow Jones earlier this year after undergoing a 20-for-1 stock split in June 2022.
The story continues
Bullish analysts
Driven by explosive growth prospects, Wall Street analysts have become more bullish on NVIDIA and raised the stock’s target price. At least 28 of 58 brokerages raised their price targets on the stock, pushing the median price to $1,200, according to LSEG data.
NVIDIA currently has an average brokerage recommendation (ABR) of 1.20 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on actual recommendations (Buy, Hold, Sell, etc.) made by 41 brokerage companies. Of the 41 recommendations, 36 are Strong Buys and two are Buys. Strong Buy and Buy represent 87.8% and 4.88% of all recommendations, respectively.
Attractive valuations
NVIDIA stock has more than doubled so far this year, after rising nearly 240% in 2023, thanks to growing adoption of its H100 AI chips. Its valuation does not seem excessive, however, given that its profits are growing faster than the share price. NVIDIA is currently trading at a P/E ratio of 46.90 compared to 50.14 for Advanced Micro Devices (AMD).
NVIDIA stock is expected to surge 258% from current levels and reach a market valuation of $10 trillion by 2030, according to I/O Fund technical analyst Beth Kindig (read: NVIDIA’s Explosive Earnings: should you buy stocks or ETFs now?).
Focus on ETFs
Strive US Semiconductor ETF (SHOC) – NVIDIA occupies first place with 30.3% of assets.
VanEck Vectors Semiconductor ETF (SMH) – NVIDIA is the first company, with a share of 23.3%.
Grizzle Growth ETF (DARP) – NVIDIA occupies first place with 22.6% of assets.
TrueShares Technology, AI & Deep Learning ETF (LRNZ) – NVIDIA occupies first place with 16.4% share.
Invesco PHLX Semiconductor ETF (SOXQ) – NVIDIA occupies first place with a share of 14.6% in the basket.
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Amazon.com, Inc. (AMZN): Free Stock Analysis Report
Apple Inc. (AAPL): Free Stock Analysis Report
Microsoft Corporation (MSFT): Free Stock Analysis Report
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