Nvidia In Rush To Overtake Apple: ETFs Set To Gain Further

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Nvidia (NVDA - Free Report) has been on a solid run with no signs of a slowdown, driven by the flurry of continued artificial intelligence (AI) investments and blockbuster earnings. Its shares closed above the $1,100 milestone for the first time ever.

Last trading at $1,139, the AI chipmaker, the world’s third-most valuable company, is now just $100 billion away in market value from overtaking Apple (AAPL - Free Report) in a major reshuffle of Wall Street's biggest players. NVIDIA's market capitalization reached $2.8 trillion, compared to a market value of $2.9 trillion for Apple, the second-most valuable company after Microsoft (MSFT - Free Report).

Investors seeking to tap the robust growth could consider ETFs having the largest allocation to this AI darling stock. These are Strive U.S. Semiconductor ETF (SHOC - Free Report), VanEck Vectors Semiconductor ETF (SMH - Free Report), Grizzle Growth ETF (DARP - Free Report), TrueShares Technology, AI and Deep Learning ETF (LRNZ - Free Report) and Invesco PHLX Semiconductor ETF (SOXQ - Free Report).
 

AI Boom

Nvidia has been at the forefront of technology companies racing to build AI into their products and services. Nvidia founder and CEO Jensen Huang said, “The next industrial revolution has begun — companies and countries are partnering with Nvidia to to shift the trillion-dollar traditional data centers to accelerated computing and build a new type of data center — AI factories — to produce a new commodity: artificial intelligence.”

The latest catalyst driving Nvidia is the billions of dollars funding into Elon Musk’s artificial intelligence start-up. Elon Musk announced that AI start-up xAI's supercomputer will run on Nvidia technology.

Nvidia's next-generation Blackwell GPU chip is expected to drive another round of massive growth for the chip maker, along with its CUDA software platform and its exposure to the automotive market. Investors cheered CEO Jensen Huang’s comments regarding their latest chip, Blackwell, which is expected to be launched in the second half of the year.
 

Blowout Earnings

Last week, Nvidia reported blowout first-quarter fiscal 2025 results, wherein it topped both earnings and revenue estimates and offered a bullish revenue outlook for the current quarter, thanks to the solid demand for its artificial intelligence (AI)-enabled GPU chips. Its data center revenues skyrocketed 427% year over year to a record $22.6 billion, buoyed by the rapid adoption of AI technologies.
 

Stock Split: A Big Boost

The chipmaker announced a 10-to-1 stock split, effective Jun 7, and boosted its quarterly dividend by 150% to 10 cents per share. The stock split has sparked a retail frenzy as it will make Nvidiashares more accessible to a wider range of investors, including the ones who make small trades, and increase liquidity. Also, it will likely pave the way for the company’s inclusion in the Dow Jones Industrial Average.

Additionally, the lower price could pave the way for the company’s inclusion in the Dow Jones Industrial Average. Amazon (AMZN - Free Report) joined the Dow earlier this year after undergoing a 20-for-1 stock split in June 2022.
 

Bullish Analysts

Driven by explosive growth prospects, Wall Street analysts have turned more bullish on Nvidia and raised the target price on the stock. At least 28 of the 58 brokerage firms have raised their price targets on the stock, pushing up the median view to $1,200, according to LSEG data.

Nvidia currently has an average brokerage recommendation (ABR) of 1.20 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 41 brokerage firms. Of the 41 recommendations, 36 are Strong Buy, and two are Buy. Strong Buy and Buy, respectively, account for 87.8% and 4.88% of all recommendations.
 

Attractive Valuations

Nvidia stock has more than doubled so far this year, following a nearly 240% rise in 2023, courtesy of the fast-growing adoption of its H100 AI chips. However, its valuation does not seem overstretched, given that its earnings are growing faster than the share price. Nvidia is currently trading at a P/E ratio of 46.90 versus 50.14 for Advanced Micro Devices (AMD).

Nvidia stock is expected to surge 258% from the current levels and hit a $10 trillion market valuation by 2030, according to I/O Fund tech analyst Beth Kindig.
 

ETFs in Focus

Strive U.S. Semiconductor ETF (SHOC - Free Report– Nvidia occupies the top position with 30.3% of assets.

VanEck Vectors Semiconductor ETF (SMH - Free Report- Nvidia is the top firm, accounting for 23.3% share.  

Grizzle Growth ETF (DARP - Free Report- Nvidia occupies the top position with 22.6% of the assets.

TrueShares Technology, AI, and Deep Learning ETF (LRNZ - Free Report- Nvidia takes the top spot at 16.4% share.

Invesco PHLX Semiconductor ETF (SOXQ - Free Report- Nvidia occupies the top position with a 14.6% share in the basket.


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