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Buy These ETFs As Nvidia Returns To Revenue Growth

Published 02/13/2020, 11:10 PM
Updated 07/09/2023, 06:31 AM

Nvidia (NASDAQ:NVDA) reported solid fourth-quarter fiscal 2020 results after market close yesterday. Its earnings and revenues outpaced the Zacks Consensus Estimate. Also, the company offered upbeat revenue guidance for the ongoing quarter. Additionally, the graphics chip giant returned to revenue growth after a year.

As a result, shares of NVIDIA rallied much as 6% to new all-time highs in after-hours trading on elevated volume (read: Nvidia Hits New Highs Ahead of Q4 Earnings: ETFs in Focus).

Earnings per share came in at $1.54, beating the Zacks Consensus Estimate by 20 cents and surging 136.2% from the year-ago quarter. Revenues grew 40.7% year over year to $3.11 billion and outpaced the consensus mark of $2.96 billion. The strong results reflect a huge turnaround at the end of a brutal year, powered by a surge in sales of its graphics processors in the data center market.

Nvidia reduced its revenue forecast for the first quarter of fiscal 2021 by $100 million as the coronavirus outbreak in China is expected to cut into sales of its products in the region. It now expects revenues of approximately $3 billion (+/-2%) for the ongoing quarter. The new guidance is still above the Zacks Consensus Estimate of $2.84 billion (see: all the Technology ETFs here).

The stock currently has a Zacks Rank #3 (Hold) and a VGM Score of C. It falls within a favorable Zacks industry (placed at the top 18% of 250+ industries).

ETFs to Watch

This has put ETFs with higher allocation to this graphics chipmaker under the spotlight. Below we have highlighted some of the funds:

Global X Robotics & Artificial Intelligence ETF BOTZ

This fund follows the Indxx Global Robotics & Artificial Intelligence Thematic Index, which seeks to invest in companies that potentially stand to benefit from increased adoption and utilization of robotics and AI, including those involved with industrial robotics and automation, non-industrial robots, and autonomous vehicles. It holds 38 stocks in its basket with NVIDIA occupying the top spot at 9.7% allocation. The ETF has AUM of $1.5 billion and an average daily volume of 487,000 shares. It charges 68 basis points (bps) in annual fees (read: Are Robotic ETFs the Right Choice for 2020?).

iShares PHLX Semiconductor ETF SOXX

This ETF offers exposure to 30 U.S. companies that design, manufacture and distribute semiconductors by tracking the PHLX SOX Semiconductor Sector Index. Of these, NVDA takes the top spot with 8.8% allocation. The fund has amassed $2.6 billion in its asset base and charges a fee of 46 bps a year. It trades in a solid volume of 478,000 shares and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.

VanEck Vectors Video Gaming and eSports ETF ESPO

This fund offers exposure to global companies involved in video game development, e-sports and related hardware and software by tracking the MVIS Global Video Gaming and eSports Index. Holding 25 stocks in its basket, NVIDIA takes the second spot with 8.2% share. U.S. firms account for one-third of the portfolio, while Japan and China round off the next two with a double-digit allocation. The fund has gathered $84.6 million in its asset base while trading in average daily volume of 23,000 shares. It charges 55 bps in annual fees from investors.

Global X Video Games & Esports ETF (JK:HERO)

This ETF offers exposure to companies that develop or publish video games, facilitate streaming and distribution of video gaming or esports content, own and operate within competitive esports leagues, or produce hardware used in video games and esports, including augmented and virtual reality. This can be easily done by the Solactive Video Games & Esports Index. Holding 41 securities in its basket, NVIDIA is the top firm accounting for 6.4% of assets. The fund charges 50 bps in annual fees and trades in average daily volume of 16,000 shares.

VanEck Vectors Semiconductor ETF SMH

This ETF has AUM of $1.9 billion and average daily volume of about 4 million shares. The fund provides exposure to 25 global semiconductor securities by tracking the MVIS US Listed Semiconductor 25 Index. NVIDIA occupies the third spot with 6.2% of the assets. While U.S. firms dominate the fund’s holdings with 75.3% assets, Taiwan (12.7%), the Netherlands (9.4%) and Switzerland (2.6%) round off the top four slots in terms of its country exposure. The fund charges 35 bps in annual fees and has a Zacks ETF Rank #1 with a High risk outlook (read: Forget Coronavirus, Semiconductor ETFs Are a Buy).

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NVIDIA Corporation (NVDA): Free Stock Analysis Report

Global X Video Games & Esports ETF (HERO): ETF Research Reports

iShares PHLX Semiconductor ETF (SOXX): ETF Research Reports

VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports

Global X Robotics & Artificial Intelligence ETF (BOTZ): ETF Research Reports

VanEck Vectors Video Gaming and eSports ETF (ESPO): ETF Research Reports

Original post

Zacks Investment Research

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