On Jul 8, 2020, Nvidia Corp. (
NVDA Quick Quote NVDA - Free Report) beat Intel Corp. (INTC) as the largest U.S. chip maker by market cap for the first time. Nvidia’s current market cap stands at more than $258 billion while Intel’s market cap was at $247.4 billion. With this, Nvidia replaced Intel as the third-largest chipmaker in the world by market cap, behind Taiwan Semiconductor (TSM) and Samsung. What’s Behind the Rally?
Solid demand for
graphics chips in data centers and solid presence in the gaming market have powered the rally this year. In just five years, Nvidia’s data center business has grown from $300 million in annual revenues to almost $3 billion, per an article from DataCenter Knowledge. Nvidia shares are up 78.7% this year versus a decline of 2.4% in the S&P 500 and Intel shares each.
Susquehanna analyst Christopher Rolland raised his price target for Nvidia shares to $450 from $420, as he sees Mellanox, which Nvidia acquired earlier this year, growing at a double-digit rate over the next three to five years. He estimated that
Mellanox could inject $30 billion to Nvidia's market cap (read: "Merger Monday" to Benefit These ETFs).
Nvidia's data center segment skyrocketed 80% year over year and surpassed $1 billion in sales for the first time in the first quarter. The company’s presence in the gaming zone is also a positive. Nvidia reported a 50% rise in gaming hours played on its GeForce platform and strong e-tail sales of gaming laptops and hardware, which made up for the impact of store closures amid lockdowns.
Gaming is now hot amid social distancing triggered by coronavirus.
An analyst at BofA Securities believes that the gaming boom will make Nvidia a winner in the second half, especially ahead of the launch of new Microsoft and Sony consoles (read: Video Gaming ETFs to Continue Gaining Amid Coronavirus Crisis).
“Nvidia's share of Steam gamers remained unchanged month-over-month at 73.5%, and the installed base penetration of Turing cards grew 212 basis points from last month and was up six times since last 73.7May,” per the analyst from BofA Securities.
Nvidia has solid presence in the automotive vehicle market too. Recently, NVIDIA and Mercedes-Benz announced an agreement under which
Mercedes-Benz will be deploying NVIDIA’s new DRIVE platform technologies as standard equipment in all vehicles, starting in 2024.
Against this backdrop, investors can bet big on Nvidia-heavy ETFs to score smart gains. In any case, most of these ETFs come from the soaring tech sector. The ETF options are given below. We also highlight Nvidia’s weights in the fund.
ETFs in Focus VanEck Vectors Semiconductor ETF ( SMH Quick Quote SMH - Free Report) ) – 8.64% MicroSectors FANG+ ETN ( FNGS Quick Quote FNGS - Free Report) ) – 8.55% Global X Robotics & Artificial Intelligence Thematic ETF ( BOTZ Quick Quote BOTZ - Free Report) ) – 8.05% VanEck Vectors Video Gaming and eSports ETF ( ESPO Quick Quote ESPO - Free Report) ) – 7.72% IBD Breakout Opportunities ETF ( BOUT Quick Quote BOUT - Free Report) ) – 7.13% Pacer BioThreat Strategy ETF (VIRS ) – 6.83% Global X Video Games & Esports ETF ( HERO Quick Quote HERO - Free Report) ) – 6.81% Want key ETF info delivered straight to your inbox?
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