ETFs
ETFs to Mine as NVIDIA Becomes Most Valuable Company – June 20, 2024
In a historic milestone, NVIDIA (NVDA Quick QuoteNVDA – Free report) has rallied further to become the most valuable company in the world, surpassing Microsoft (MSFT). On June 18, the artificial intelligence (AI) chip maker surpassed the market capitalization of $3.33 trillion, compared to the software giant’s $3.31 trillion. NVIDIA has seen a monumental rise over the past 18 months. It reached the $1 trillion mark in May 2023 and reached $2 trillion in February 2024, surpassing Amazon (AMZN) and Alphabet (GOOGL). The chipmaker surpassed Apple (AAPL) again earlier this month (read: NVIDIA overtakes Apple: ETFs will exploit the incredible growth story).
The stock is up 173% so far this year and is expected to rise further. Most analysts believe NVIDIA will become much more valuable in the future due to its dominance in the billion-dollar AI chip market.
More growth on the way
NVIDIA has been at the forefront of technology companies rushing to integrate AI into their products and services. Its success is largely attributed to its leadership in the development of advanced graphics processing units (GPUs), unrivaled in the production of processors powering artificial intelligence systems, including generative AI, the technology that underpins ChatGPT’s OpenAI and which can create text, images and other media. Leading cloud service providers rely on NVIDIA GPUs to train and run AI applications. The company’s customers include around 20,000 start-ups, as well as big names like Microsoft, Alphabet and Amazon. The company has an 80% market share in data center AI chips.
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.
Demand for NVIDIA’s H100 accelerators has increased, allowing the company to reach this historic milestone. Its next-generation GPU chip is expected to drive a massive new wave of growth. Earlier this month, the AI chipmaker unveiled a high-power version of its Blackwell chip – called Blackwell Ultra – scheduled for release in 2025, followed by a new AI chip platform, Rubin, in 2026. The company will launch an Ultra version of Rubin in 2027. Its first Blackwell processors are expected to ship later this year, replacing the popular Hopper generative AI chips.
Additionally, NVIDIA completed a 10-for-1 stock split on June 7, which made its shares more affordable to a wider range of investors, including those making smaller trades, thereby increasing liquidity and sparking a retail frenzy. The stock split also likely paved the way for NVIDIA’s inclusion in the Dow Jones Industrial Average, similar to Amazon (AMZN), which joined the index earlier this year after undergoing a stock split of shares of 20 for 1 in June 2022 (read: ETFs will exploit NVIDIA’s 10-for-1 stock split retail frenzy).
Bullish analysts
After the stock’s epic run to a $3 trillion market cap, one Wall Street analyst expects NVIDIA to reach nearly $5 trillion. Rosenblatt Securities analyst Hans Mosesmann reiterated his buy rating on the stock and increased its price from $140 to $200. That represents a potential 53% upside from the June 17 closing price and would push the chipmaker’s market cap well past $5 trillion. Wedbush analysts said NVIDIA’s AI-optimized chips are “essentially the new gold or oil of the tech sector” as a growing number of companies adopt the nascent technology (read: Nvidia ETF: Is There More Room to Run?).
Some analysts believe that NVIDIA is on track to become the first company to generate $10 trillion in revenue. Writing for Forbes, Beth Kindig, CEO and senior technical analyst of the I/O fund, said NVIDIA could reach this milestone by 2030 or sooner, citing the company’s rapid product development, the strength of its platform and CUDA software form and its expansion beyond GPUs. in networking and software platforms.
ETFs on the rise
While there are many ETFs in the space that are capitalizing on NVIDIA’s strong growth, we’ve highlighted those with the largest allocation to the AI chip maker.
Strive US Semiconductor ETF (Quick quote SHOCSHOCK – Free report) – Up 35.6% since the start of the year, NVIDIA exposure: 27.8%
AXS Esoterica NextG Economy ETF (Quick quote WUGIWUGI – Free report) – Up 38.7% since the start of the year, NVIDIA exposure: 26.4%
Grizzle Growth ETF (DARP quick quoteDARP – Free report) – Up 24.4% since the start of the year, NVIDIA exposure: 26.1%
VanEck Vectors Semiconductor ETF (Quick quote SMHSMH – Free report) – Up 58.3% since the start of the year, NVIDIA exposure: 24.6%
TrueShares Technology, AI and Deep Learning ETF (Quick quote LRNZLRNZ – Free report) – Up 1.4% since the start of the year, NVIDIA exposure: 19.4%
ETF T-REX 2X Long NVIDIA Daily Target (Quick quote NVDXNVDX – Free report) – Up 526% year to date, NVIDIA exposure: 200%
GraniteShares ETF 2x Long Daily NVDA (Quick quote NVDLNVDL – Free report) – Up 470.9% year to date, NVIDIA exposure: 200%
Conclusion
As NVIDIA continues to innovate and expand its product offerings, the company’s valuation is expected to remain strong, strengthening its position as a dominant force in the technology industry. Becoming the world’s most valuable company is a testament to NVIDIA’s strategic vision and central role in shaping the future of technology. The ETFs mentioned above will continue to benefit from a huge rally with the rise of NVIDIA.