NVDL, AI ETFs Jump on AMD, Renewed Nvidia Hope
AI ETFs are back, but for how long?
Following a three-week decline of nearly 20%, chip company stocks, as measured by the VanEck Semiconductor ETF (SMH), jumped 7.4% on Wednesday as AMD’s earnings breathed new life into the once-dominant technology subsector.
Thanks to better-than-expected guidance from the California-based semiconductor company and Nvidia peer, Advanced Micro Devices, the big tech stock correction reversed in a big way as AMD rose nearly 4% and NVDA jumped 13%.
The semiconductor stock rally helped to lift AI ETFs and the broader stock market, as the Global X Robotics & Artificial Intelligence ETF (BOTZ) and the SPDR S&P 500 ETF Trust (SPY) rose 3.6% and nearly 1.7%, respectively.
For investors willing to double the downside risk in exchange for twice the upside potential, Wednesday’s renewed hope around semiconductors helped to propel the GraniteShares 2x Long NVDA Daily ETF (NVDL) more than 26% higher.
Was Wednesday’s healthy gain a one-off bounce for semiconductor stocks and the ETFs that hold them, or will the artificial intelligence hype regain its positive momentum to carry the tech sector higher?
Nvidia Earnings Date and Expectations
Investors may need to keep guessing for a while as Nvidia’s next quarterly earnings report is on Aug. 28. The semiconductor company has been at the forefront of the AI boom, and therefore, a focal point for investors over the past two years. Nvidia seems likely to continue its momentum based on early predictions. According to Nasdaq, the consensus forecast of 13 analysts polled by Zacks Investment Research estimated Nvidia’s earnings per share in the quarter to be $0.59, which is more than double the $0.25 EPS reported for the same quarter last year.
Here's what investors are likely to focus on:
Data center revenue: This segment, fueled by AI chip demand, is expected to continue its strong growth trajectory. Investors will be seeking guidance for future quarters.
Gaming revenue: While the gaming market has fluctuated, Nvidia's RTX GPUs remain popular. Investors will be watching for trends in this segment.
AI chip demand: Given the intense competition in the AI chip market, investors want to know if Nvidia can maintain its leadership position. Any insights into supply chain challenges or new product developments will be closely watched.
Guidance: Future revenue and earnings guidance will be crucial for investors to gauge the company's growth prospects.
Expectations have been consistently high for Nvidia to beat earnings estimates, as the semiconductor company has done in recent quarters. Maintaining this momentum may grow increasingly difficult in the quarters ahead and could lead to price volatility.