Nvidia Hits New Highs Ahead Of Q4 Earnings: ETFs In Focus

Graphics chipmaker Nvidia (NASDAQ:NVDA) has been on an uptrend ahead of fourth-quarter fiscal 2020 earnings scheduled on Feb 13, backed by optimism of Wall Street analysts. The stock hit new 52-week high and is up more than 13% so far this month, easily outperforming the industry average growth of 6%.



This is especially true as number of analysts, including Oppenheimer, Deutsche Bank (DE:DBKGn), RBC have raised the price target on the stock, stating that the chipmaker is expected to return to growth after more than a year of quarterly revenue decline. Strong demand in gaming and data center will fuel growth (read: Forget Coronavirus, Semiconductor ETFs Are a Buy).

The trend is likely to continue, though earnings beat is difficult to predict at this time.

Earnings Whispers

Nvidia has a Zacks Rank #3 (Hold) and an Earnings ESP of 0.00%. According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The videogame-gear specialist saw no earnings estimate revisions over the past 30 days for the fourth quarter of fiscal 2020. The company’s earnings surprise history is solid. It delivered a positive earnings surprise of 8.80%, on average, over the past four quarters. Additionally, Nvidia is expected to post substantial earnings growth of 107.5% and revenue growth of 34.2% for the to-be-reported quarter.

Further, the stock belongs to a top-ranked Zacks industry (placed at the top 32% of 250+ industries) with an unimpressive VGM Score of C (see: all the Technology ETFs here).

The Zacks Consensus Estimate for average target price is $243.32 with nearly 71% of the analysts giving a Strong Buy or a Buy rating ahead of the company’s earnings.

ETFs in Focus

Given the hike in target price, investors could focus on ETFs having the largest allocation to this graphics chipmaker. Below are five ETFs with the highest allocation to NVDA that could make compelling plays ahead of the earnings report:

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 9.6% allocation. The ETF has AUM of $1.5 billion and average daily volume of 494,000 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, Nvidia takes the top spot with 8.8% allocation. The fund has amassed $2.5 billion in its asset base and charges a fee of 46 bps a year. It trades in a solid volume of 483,000 shares and has a Zacks ETF Rank #2 (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 top spot with 8.2% share. American 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 $83.4 million in its asset base while trading in average daily volume of 22,000 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 the 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 second firm accounting for 6.4% of assets. The fund charges 50 bps in annual fees and trades in average daily volume of 2,000 shares.

VanEck Vectors Semiconductor ETF SMH

This ETF has AUM of $1.7 billion and average daily volume of about 4.1 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 the American firms dominate the fund’s holdings with 75.3% assets, Taiwan (12.7%), the Netherlands (9.4%) and Switzerland (2.6%) capture the top four slots in terms of its country exposure. The fund has an expense ratio of 0.35%. It has a Zacks ETF Rank #2 with a High risk outlook (read: Chip ETFs to Surge on Intel (NASDAQ:INTC)'s Solid Q4 Earnings, Upbeat View).

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