Nvidia Sparks Rally In AI ETFs

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Investors’ favorite Nvidia (NVDA) injected bullishness across the tech sector, especially in the artificial intelligence (AI) segment. This is especially true as the graphics chipmaker reported blockbuster second-quarter fiscal 2024 results, wherein it topped both earnings and revenue estimates and offered a bullish revenue outlook driven by the artificial intelligence (AI) boom.

Nvidia shares zoomed as much as 10% to a record high in after-market trading on elevated volume. This lifted NVDA stock’s market value by about $110 billion to more than $1.27 trillion, thus extending its lead as the world's most valuable chipmaker. It further solidified its position as the globe's premier chipmaker in terms of value and fueled a surge in various AI-centric stocks, thus reinvigorating the U.S. stock market's recovery momentum.

The market values of major tech and AI-focused stocks rose by more than $70 billion, excluding Nvidia's gains. The smooth trading is expected to propel AI ETFs such as Global X Robotics & Artificial Intelligence ETFGlobal X Artificial Intelligence & Technology ETFFirst Trust Nasdaq Artificial Intelligence and Robotics ETFWisdomtree Artificial Intelligence and Innovation Fund and AI Powered Equity ETF.

 

Nvidia: King of AI

Nvidia is at the center of the artificial intelligence explosion thanks to its high-powered graphics cards and server products. The robust results underscore the growing significance of the company’s graphics processing units for the generative AI boom. Nvidia CEO Jensen Huang expressed optimism that the AI boom will continue until 2024.

 

For the third quarter of fiscal 2024, the graphics chipmaker expects revenues of around $16 billion, plus or minus 2%. This is much higher than the Zacks Consensus Estimate of $12.3 billion. The world’s largest chipmaker continues to benefit from the explosive demand for its cutting-edge chips used in AI applications, which are used to power ChatGPT and many similar services, and is boosting supply to meet surging demand. Nvidia's chips are used in applications ranging from robotics and the metaverse to medical imaging and video analytics

Nvidia CEO Jensen Huang said in a statement that "A new computing era has begun." "Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI."

 

ETFs in Focus

Let’s delve into each ETF below:

 

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 with industrial robotics and automation, non-industrial robots and autonomous vehicles.

With AUM of $2.1 billion, Global X Robotics & Artificial Intelligence ETF has 43 stocks in its basket and charges 69 bps in annual fees. The ETF trades in an average daily volume of 1.5 million shares.

 

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 87 stocks in its basket (read: Why AI ETFs Will Continue to Prevail in the Long Run).

Global X Artificial Intelligence & Technology ETF has amassed $501.1 million in its asset base and charges 68 bps in fees per year. It trades in average daily volume of 390,000 shares.

 

First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT)

First Trust Nasdaq Artificial Intelligence and Robotics ETF follows the Nasdaq CTA Artificial Intelligence and Robotics Index, which offers exposure to companies engaged in the artificial intelligence and robotics segments of the technology, industrial and other economic sectors. It holds 106 stocks in its basket and charges 65 bps in fees per year.

First Trust Nasdaq Artificial Intelligence and Robotics ETF has accumulated $427.7 million in its asset base and trades in average daily volume of 121,000 shares.

 

WisdomTree Artificial Intelligence and Innovation Fund (WTAI)

WisdomTree Artificial Intelligence and Innovation Fund provides exposure to companies offering AI technologies and contributing to the development and deployment of AI innovations. It follows the WisdomTree Artificial Intelligence & Innovation Index, which identifies companies that are primarily involved in the investment theme of AI and Innovation. WisdomTree Artificial Intelligence and Innovation Fund holds 77 stocks in its basket.

WisdomTree Artificial Intelligence and Innovation Fund has amassed $148.3 million in its asset base and charges 45 bps in annual fees. It trades in average daily volume of 185,000 shares.

 

AI Powered Equity ETF (AIEQ)

AI Powered Equity ETF is the first actively managed ETF to fully utilize artificial intelligence as a method for stock selection. The ETF applies proprietary analytical algorithms to AI technology, which can process over one million pieces of information per day to build predictive financial models on approximately 6,000 U.S. companies. AI Powered Equity ETF holds a basket of 113 securities.

AI Powered Equity ETF charges 75 bps in annual fees and trades in a lower volume of 15,000 shares per day on average. It has amassed $108.6 million in its asset base.


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