ETFs
ETFs will exploit NVIDIA’s 10-for-1 stock split retail frenzy
NVIDIA NVDA has been performing well with no signs of slowing down. After blockbuster results, the AI chipmaker hits a series of new highs with the upcoming 10-for-1 stock split, which will make its shares more affordable to a wider range of investors, including those trading small transactions, and will increase liquidity (read: NVIDIA rushes to overtake Apple: ETFs are poised to gain more).
Investors looking to seize the opportunity might consider ETFs holding the largest allocation to this AI darling. These are Strive US Semiconductor ETF SHOCK, AXS Esoterica NextG Economy ETF WUGI, VanEck Vectors Semiconductor ETF SMH, Grizzle Growth ETF DARP and TrueShares Technology, AI and Deep Learning ETF LRNZ.
Stock Split: A Retail Frenzy
In a stock split, the company increases the number of shares, thereby reducing the stock price. However, the total dollar value of all outstanding shares remains the same and does not affect the company’s valuation. At the end of the week, NVDA will undergo a 10-for-1 stock split. This means that for every NVIDIA share an investor owns, they will receive an additional nine once the split is complete. Thus, NVIDIA shareholders will receive a greater number of shares at lower prices.
To receive the additional shares, an investor must be an NVIDIA shareholder as of the record date, June 6. NVIDIA will issue the new shares at the end of the following trading day. The stock will then begin trading at the post-split adjusted price on June 10.
Additionally, the decline in NVDA’s price will likely pave the way for the company’s inclusion in the Dow Jones Industrial Average. Amazon AMZN joined the Dow earlier this year after undergoing a 20-for-1 stock split in June 2022.
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 accelerated computing and build a new type of data center – AI factories – to produce a new commodity: artificial intelligence.
This past weekend, NVIDIA unveiled its next generation of AI chips, dubbed “Rubin,” which is expected to generate a massive new wave of growth for the chipmaker. Rubin, scheduled for release in 2026, appears to accelerate the already accelerating pace of the company’s AI chip advancement. It will include new graphics processing units, or GPUs, a new central processing unit (CPU) called Vera, and advanced networking chips, Huang said (read: Can NVIDIA’s AI chip dominance continue?).
NVIDIA also plans to unveil a Blackwell Ultra processor in 2025, with the first Blackwell processors expected to ship later this year, replacing the popular Hopper generative AI chips.
Additionally, Elon Musk recently announced that AI startup xAI’s supercomputer will run on NVIDIA technology. . This week, Foxconn announced plans to build an advanced computing center in Taiwan using NVIDIA’s Blackwell chips. These measures should further strengthen the company’s growth prospects.
The story continues
Bullish analysts
Wall Street analysts continue to raise their price targets ahead of NVIDIA’s high-profile stock split. Bank of America called NVIDIA a “top pick,” reiterating its Buy rating on the stock and increasing its price target from $1,320 to $1,500. As the chipmaker accelerates its product upgrade cycle, the analyst believes the move “will continue to strengthen NVIDIA’s leadership position in AI.”
Driven by explosive growth prospects, Wall Street analysts became more bullish on NVIDIA and raised the stock’s target price following the earnings. At least 28 of 58 brokerages raised their price targets on the stock, pushing the median price to $1,200, according to recent LSEG data.
Attractive valuations
NVIDIA has soared about 132% so far this year, following a nearly 240% increase in 2023, driven by 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 42.85 compared to 47.81 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 Beth Kindig, technical analyst at I/O Fund (read: NVIDIA’s Explosive Earnings: Should Are you buying stocks or ETFs now?).
Focus on ETFs
Strive US Semiconductor ETF (SHOCK) – NVIDIA occupies first place with 31.8% of assets.
AXS Esoterica NextG Economy ETF (WUGI) – NVIDIA occupies first place with a share of 25.6% in the basket.
VanEck Vectors Semiconductor ETF (SMH) – NVIDIA is the first company, with a share of 24.2%.
Grizzle Growth ETF (DARP) – NVIDIA occupies first place with 23.7% of assets.
TrueShares Technology, AI & Deep Learning ETF (LRNZ) – NVIDIA occupies first place with 17.5% share.
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Amazon.com, Inc. (AMZN): Free Stock Analysis Report
Advanced Micro Devices, Inc. (AMD): 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
AXS Esoterica NextG Economy ETF (WUGI): ETF Research Reports
Strive US Semiconductor ETF (SHOC): ETF Research Reports
Grizzle Growth ETF (DARP): ETF Research Reports