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Nvidia’s Impending Earnings Potential for ETFs Nvidia’s Potential Earnings Triumph: 5 ETFs to Consider

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  Nvidia’s Potential Earnings Triumph: 5 ETFs to Consider

Amid an exhilarating AI-driven frenzy and analysts’ optimistic outlook, chip giant Nvidia’s fourth-quarter fiscal 2024 results, to be unveiled on Feb 21, after market closure, are widely anticipated. Following a monumental surge in market value, triumphantly surpassing Amazon, Nvidia has claimed the fourth spot as the most valuable company in the United States.

The odds are overwhelmingly favorable for a surpassing of earnings expectations and encouraging earnings revisions. This brilliant display is set to continue, fortifying the appeal of ETFs embodying expansive Nvidia stakes ahead of the earnings revelation. The most compelling contenders include the VanEck Vectors Semiconductor ETF SMH, AXS Esoterica NextG Economy ETF WUGI, Global X Robotics & Artificial Intelligence ETF BOTZ, MeetKevin Pricing Power ETF PP and Pacer Data and Digital Revolution ETF TRFK.

Speculation on Earnings

Nvidia currently holds a Zacks Rank #2 (Buy) and an Earnings ESP of +3.67%. Statistically, this amalgamation of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) maximizes the likelihood of outperforming earnings projections. This leading chip manufacturer experienced a positive forward momentum in earnings estimates for the fourth quarter of fiscal 2024, with analysts anchoring their predictions higher mere days prior to the earnings announcement. An ultra-massive upsurge of 415.9% is expected in earnings, with an equally impressive forecast of 234% growth in revenues. Nvidia’s track record in earnings surprise stands firm, exhibiting an average earnings surprise of 18.99% in the last four quarters.

Nvidia currently boasts an average brokerage recommendation ABR of 1.20, on a scale of 1 to 5 (Strong Buy to Strong Sell), derived from assessments made by 40 brokerage firms. 35 out of the 40 recommendations advocate a Strong Buy, with an additional 2 signaling Buy. One month ago, the consensus stood at an ABR of 1.23, based on 37 recommendations.

Looking at short-term prognostications by 37 analysts, the average price target for Nvidia lands at $694.44, oscillating between a low of $410.00 and a high of $1,100.00.

Market Sentiment

In anticipation of the earnings release, analysts have been vigorously hiking the price targets for Nvidia. Morgan Stanley bolsters the price target to $750, while Goldman and Bank of America raise theirs to $800. Moreover, Melius Research skyrockets the price target for Nvidia to an astounding $920 from the previous $750.

The surge is largely propelled by Nvidia’s preeminent status in the AI sector. As the leading chip manufacturer, it continues to thrive on escalating demand for its cutting-edge chips driving AI applications, mobilized in powering ChatGPT and similar services. The company has been ramping up its supply to accommodate the seismic spike in demand. Nvidia’s chips find diverse applications, from robotics and the metaverse to medical imaging and video analytics.

Media reports project Nvidia’s revenues for the fourth quarter of fiscal 2024 at approximately $20 billion, give or take 2%. However, new regulations imposed by the Biden administration on chip exports to China are poised to exert pressure on the results. A sharp downturn in fourth-quarter sales is anticipated in China, a pivotal revenue source, in light of the recent U.S. protocols.

Exploring ETFs

It’s informative to inspect each ETF individually:

VanEck Vectors Semiconductor ETF SMH

VanEck Vectors Semiconductor ETF focuses on companies engaged in semiconductor production and equipment. Tracking the MVIS US Listed Semiconductor 25 Index, the fund holds the most liquid companies in the sector based on market capitalization and trading volume. It features 26 stocks, with Nvidia commanding a substantial 24.7% allocation.

VanEck Vectors Semiconductor ETF manages assets totaling $14.8 billion and bears an annual fee of 35 bps.

AXS Esoterica NextG Economy ETF (WUGI)

AXS Esoterica NextG Economy ETF, an actively managed ETF, invests in stocks of companies benefiting from the evolving digital economy. With a portfolio comprising 33 stocks, Nvidia takes pole position with a 24.1% share.

AXS Esoterica NextG Economy ETF holds assets amounting to $29.6 million and imposes a fee of 75 bps annually.

Global X Robotics & Artificial Intelligence ETF (BOTZ)

Global X Robotics & Artificial Intelligence ETF shadows the Indxx Global Robotics & Artificial Intelligence Thematic Index, seeking investments in companies poised to reap the gains from increased adoption and usage of robotics and AI, spanning industrial robotics, automation, non-industrial robots, and autonomous vehicles.

Global X Robotics & Artificial Intelligence ETF encompasses 42 stocks, with Nvidia taking the top slot at 19.9%. The fund commands assets under management (AUM) of $2.5 billion, with an annual fee of 69 bps.

MeetKevin Pricing Power ETF (PP)

MeetKevin Pricing Power ETF is an actively managed ETF aiming to meet its investment objective predominantly through U.S.-listed equity securities of Innovative Companies, prioritizing those exhibiting superior “pricing power.” The fund embraces a modest basket of 16 stocks, with Nvidia claiming the prime position at 18.5%.

Pacer Data and Digital Revolution ETF (TRFK)

Pacer Data and Digital Revolution ETF seeks to provide investors with exposure to globally listed stocks and depositary receipts of data and digital revolution companies. It adheres to the Pacer Data Transmission and Communication Revolution Index, featuring 79 stocks, with Nvidia at the pinnacle, grasping a 10.2% stake.

Pacer Data and Digital Revolution ETF has amassed $21.1 million in AUM, carrying an expense ratio of 0.60%.

 

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