NVIDIA’s Q2 Earnings Report and the ETFs that Own It

  • Earnings Highlights: NVIDIA reported Q2 earnings that surpassed high expectations. The company’s revenue was $13.51 billion, marking a 101% increase from the previous year. Adjusted earnings were $2.70 per share, a 429% rise from last year. These figures exceeded analysts’ predictions of $11.04 billion in revenue and $2.07 earnings per share.
  • Stock Performance: Following the earnings announcement, NVIDIA shares surged by 9% in after-hours trading, reaching a record high of $515 per share.
  • Revenue Breakdown: The company’s data center revenue stood at $10.3 billion, and gaming revenues were $2.5 billion. Both segments outperformed forecasts, which were $8 billion for data centers and $2.4 billion for gaming.
  • AI Hype Cycle: NVIDIA’s earnings report was viewed as a significant indicator for the AI industry’s momentum. Many companies have ventured into AI technology, aiming to capitalize on its growing popularity. NVIDIA, however, has experienced a transformative impact on its business due to AI.
  • CEO Statement: NVIDIA’s CEO, Jensen Huang, emphasized the dawn of a new computing era. He highlighted the global shift from general-purpose to accelerated computing and generative AI. He also mentioned significant partnerships and the adoption of NVIDIA’s AI solutions across various industries.
  • Event Highlight: A photo captured Jensen Huang, NVIDIA’s President, showcasing the Grace hopper superchip CPU used for generative AI during the COMPUTEX 2023 event in Taipei, Taiwan.
  • Supply Concerns: The surge in demand for NVIDIA’s chips has led to speculations about TSMC’s (NVIDIA’s key supplier) capability to meet the production requirements for graphics processors.
  • AI Popularity: The AI industry gained significant traction in November 2022 with the launch of OpenAI’s generative AI app, ChatGPT. Its rapid success drew attention to AI technology, leading tech giants like Microsoft, Google, and Meta to develop or announce their generative AI solutions.

Here’s a brief description of the top 5 funds with the largest holdings of NVIDIA Corporation (NVDA):

  1. iShares PHLX Semiconductor ETF (SOXX):
    • Holding Size: 8.63%
    • Description: The iShares PHLX Semiconductor ETF seeks to track the investment results of the PHLX Semiconductor Sector Index. The fund offers exposure to U.S. companies that design, manufacture, and distribute semiconductors, making it an ideal choice for investors looking for a targeted play on the semiconductor sector.
  2. VanEck Vectors Semiconductor ETF (SMH):
    • Holding Size: 8.50%
    • Description: The VanEck Vectors Semiconductor ETF aims to replicate the MVIS® US Listed Semiconductor 25 Index. This ETF provides targeted exposure to the largest and most liquid companies in the semiconductor industry, based on market capitalization and trading volume.
  3. Invesco Dynamic Semiconductors ETF (PSI):
    • Holding Size: 7.98%
    • Description: The Invesco Dynamic Semiconductors ETF is based on the Dynamic Semiconductor Intellidex℠ Index. The fund generally invests at least 90% of its total assets in common stocks of semiconductor companies that comprise the Index. The Intellidex Index thoroughly evaluates companies based on various investment merit criteria, including price momentum, earnings momentum, quality, management action, and value.
  4. SPDR S&P Semiconductor ETF (XSD):
    • Holding Size: 3.18%
    • Description: The SPDR S&P Semiconductor ETF seeks to provide investment results that correspond to the total return performance of the S&P Semiconductor Select Industry Index. This ETF offers exposure to the semiconductor segment of the U.S. equity market, making it a suitable choice for investors looking for a way to invest in this specific industry.
  5. First Trust Nasdaq Semiconductor ETF (FTXL):
    • Holding Size: 2.99%
    • Description: The First Trust Nasdaq Semiconductor ETF seeks to replicate the performance of the Nasdaq US Smart Semiconductor Index. The fund invests in companies within the semiconductor industry, and its holdings are selected based on multiple factors, including growth, value, and volatility.
Heavily Traded ETFs
SPDR S&P 500 - SPY
Invesco QQQ
Vanguard S&P 500 - VOO
Vanguard Total Market - VTI
Energy Select Sector - XLE

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