In an impressive display of financial performance, Nvidia NVDA, a leading U.S. chip designer, exceeded Wall Street's fourth-quarter earnings and revenue expectations on Wednesday. This announcement not only showcased Nvidia's robust position in the AI chip market but also signaled promising prospects for the semiconductor industry in 2025 and beyond.
The earnings release has spread optimism across the board in AI and semiconductor stocks:
Taiwan Semiconductor Manufacturing Company (TSMC), a key supplier to Nvidia and the world's premier contract chip manufacturer, saw its shares increase by up to 2% in Thursday's trading session. TSMC's advanced processors are integral to tech giants like Nvidia and Apple.
Super Micro Computer (SMCI), known for its server components, experienced a significant 11.4% rise in its shares during Wednesday's after-hours trading. ASML, the Dutch company behind the lithography machines essential for chip production supplied to TSMC, enjoyed a 2.7% uptick in its share price following the announcement.
Rival companies Advanced Micro Devices (AMD) and Arm Holdings (ARM) also rode the wave of optimism, with their shares climbing 4.1% and 7.9%, respectively, in after-hours trading (read: Should You Buy Nvidia After Its Huge Run? ETFs in Focus).
The surge in Nvidia's stock by 9% in extended trading is a testament to the increasing demand for its graphics processing units (GPUs), propelled by the AI revolution. The company's GPUs, pivotal for running AI applications like OpenAI's ChatGPT, have become indispensable in powering large language models that deliver human-like interactions.
This bullish trend extended to South Korea's memory chipmakers, Samsung Electronics and SK Hynix, which recorded gains of 0.4% and 3.2%, underscoring the critical role of high-performance memory chips in supporting complex AI tasks. Other beneficiaries included Taiwanese semiconductor firms Orient Semiconductor Electronics and MediaTek, alongside U.S. chipmakers Intel (INTC), Broadcom (AVGO), and Qualcomm (QCOM), which all saw their share price rise in Wednesday's extended trading.
Nvidia CEO Jensen Huang's outlook on the earnings call painted a bright future for the sector, emphasizing the enduring demand for Nvidia's GPUs amid a broader industry shift toward specialized accelerators over traditional central processors. Gene Munster of Deepwater Asset Management echoed this sentiment, predicting that Nvidia's market performance and margins might exceed expectations, highlighting the company's strong position in the rapidly evolving tech landscape.
This financial update not only reflects Nvidia's pivotal role in the AI and semiconductor sectors but also signals a wider industry trend of growth and innovation, setting the stage for an exciting future in technology.
ETFs to Gain
The bullishness will spread into the ETF world as well, benefiting the ones engaged in the AI and semiconductor industry. While there are several options available in the space, we have highlighted five popular ones:
Global X Robotics & Artificial Intelligence ETF (BOTZ)
Global X Robotics & Artificial Intelligence ETF follows the Indxx Global Robotics & Artificial Intelligence Thematic Index, which seeks investment in companies that stand to benefit from the increased adoption and utilization of robotics and AI, including those involved in industrial robotics and automation, non-industrial robots and autonomous vehicles.
Global X Robotics & Artificial Intelligence ETF has 42 stocks in its basket. The ETF has AUM of $2.5 billion and charges 69 bps in annual fees. It trades in an average daily volume of 1.2 million shares (read: Nvidia Overtakes Amazon in Market Value: ETFs to Tap).
Global X Artificial Intelligence & Technology ETF (AIQ)
Global X Artificial Intelligence & Technology ETF seeks to invest in companies that potentially stand to benefit from the further development and utilization of artificial intelligence technology in their products and services, as well as in companies that provide hardware facilitating the use of AI for the analysis of big data. It follows the Indxx Artificial Intelligence & Big Data Index, holding 86 stocks in its basket.
Global X Artificial Intelligence & Technology ETF has amassed $1.2 billion in its asset base and charges 68 bps in fees per year. It trades in an average daily volume of 453,000 shares.
VanEck Vectors Semiconductor ETF (SMH)
VanEck Vectors Semiconductor ETF offers exposure to the companies involved in semiconductor production and equipment. SMH follows the MVIS US Listed Semiconductor 25 Index, which measures the overall performance of companies involved in semiconductor production and equipment. VanEck Vectors Semiconductor ETF holds 26 stocks in its basket.
VanEck Vectors Semiconductor ETF has managed assets worth $14.8 billion and charges 35 bps in annual fees and expenses. SMH is heavily traded with a volume of 7.4 million shares per day and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.
iShares Semiconductor ETF (SOXX)
iShares Semiconductor ETF follows the NYSE Semiconductor Index and offers exposure to U.S. companies that design, manufacture and distribute semiconductors. It holds 30 securities in its basket (read: Semiconductor ETFs Look Well Poised Post Q4 Earnings).
iShares Semiconductor ETF has amassed $11.9 billion in its asset base and trades in a volume of about 963,000 shares a day. The product charges a fee of 35 bps a year from investors and has a Zacks ETF Rank #1 with a High risk outlook.
SPDR S&P Semiconductor ETF (XSD)
SPDR S&P Semiconductor ETF offers exposure to the semiconductor segment of the broader technology sector and tracks the S&P Semiconductor Select Industry Index. It holds 39 stocks in its portfolio. SPDR S&P Semiconductor ETF has AUM of $1.4 billion and an average daily volume of about 52,000 shares. SPDR S&P Semiconductor ETF charges 35 bps in fees per year and has a Zacks ETF Rank #1.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.
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