ETFs
Nvidia’s profit surge lifts Nasdaq, chip ETFs and others in AI ecosystem
Key takeaways
- Nvidia shares jumped after the chipmaker reported better-than-expected earnings.
- The move helped boost the Nasdaq 100, since Nvidia has a roughly 6.5% weighting on the index.
- Semiconductor ETFs, such as the VanEck Semiconductor ETF and iShares Semiconductor ETF, also rose, driven by the funds’ heavy exposure to Nvidia.
- Shares of Nvidia-related companies also rose, including Dell Technologies.
- Other semiconductor stocks rose in sympathy with the AI chip leader.
After reporting better than expected profits and respect the increasingly high bar set for investors artificial intelligence (AI) honey, Nvidia (NVDA) the shares broke out, raising the Nasdaq100exposed semiconductor exchange-traded funds (ETFs), and other companies in its AI ecosystem. Nvidia shares were up more than 10% at $1,044.88 in early trading Thursday at 10:30 a.m. ET.
Nasdaq 100 Rises, Supported by Chipmaker’s Pop
The Nasdaq 100 rose about 0.5% in early trading Thursday, following Nvidia’s higher earnings. The chipmaker has a weighting of about 6.5% in the Nasdaq 100, the third largest company after Microsoft (MSFT) at 8.6% and Apple (AAPL) at 8%, reflected in the assets of the Invesco QQQ ETF (QQQ), an ETF reflecting the index.
THE the index is built with a modified capitalization method, which uses weightings of constituent companies based on their market capitalization. After its profit-fueled gains, Nvidia’s market cap surged to more than $2.5 trillion from 2.3 trillion dollars the day before. If sustained, Nvidia’s higher market capitalization could change the stock’s weighting in the index during quarterly compounding. rebalancing.
THE S&P500 was 0.1% higher, with Nvidia catching up around 5.5% of the index.
Semiconductor ETFs jump
Nvidia’s influence on semiconductor industry ETFs as well as AI-focused ETFs means the chipmaker’s jump has also driven up exposed ETFs.
The VanEck Semiconductor ETF (SMH) rose nearly 3% while the iShares Semiconductor ETF (SOXX) gained almost 2%.
Nvidia represents more than 20% of the VanEck Semiconductor ETF, making it the highest weighted company in the ETF, followed by Taiwan Semiconductor Manufacturing Company (TSM) at almost 13%. The chipmaker has a 9% weighting in the iShares Semiconductor ETF, followed by Broadcom (AVGO) at 8% and Qualcomm (QCOM) to less than 7.5%.
Nvidia’s AI ecosystem shares the gains
As Nvidia shares gained, shares of companies related to the chipmaker followed suit, including some of Nvidia’s partners and customers, as well as other semiconductor makers.
Dell Technologies (DELL) shares rose nearly 7% after Nvidia CEO Jensen Huang called on the company to chipmaker earnings call by highlighting Nvidia’s “rich partner ecosystem”. Dell recently announced an expansion of its AI factory with Nvidia products.
Other stocks in the semiconductor industry have gained sympathy with Nvidia, as good news for the leading AI chipmaker is often good news for others in the industry. Micron technology (UM), which produces memory chips used in Nvidia GPUs, rose 2.5%, while Marvell Technology (MRVL) gained 1.7%.