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ETFs to Watch as Nvidia Hits New High Ahead of Q2 Earnings

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Backed by the optimism of Wall Street analysts, Nvidia (NVDA - Free Report) has been on an uptrend ahead of its second-quarter fiscal 2021 earnings scheduled on Aug 19. The stock hit a new all-time high and is up nearly 16.2% so far this month. Notably, NVDA shares are up 40% over the past three months (read: Semiconductor ETFs Roaring to New Highs on Solid Earnings).

The solid trend is likely to continue as the graphics chipmaker has solid fundamentals.

Earnings Whispers

According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. Nvidia has a Zacks Rank #2 (Buy) and an Earnings ESP of 0.00%. 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 revision over the past 30 days for the second quarter of fiscal 2021. The company’s earnings surprise history is solid. It delivered an earnings surprise of 10.40%, on average, over the past four quarters. Additionally, Nvidia is expected to post substantial earnings and revenue growth of 56.45% and 41.71%, respectively, for the to-be-reported quarter.

Further, the stock belongs to a top-ranked Zacks industry (placed at the top 29% of 250+ industries) (see: all the Technology ETFs here).

The Zacks Consensus Estimate for the average target price is $401.31 with nearly 86% of the analysts giving a Strong Buy or a Buy rating ahead of the company’s earnings.

What’s Hot?

Several analysts like Raymond James, Wells Fargo, Oppenheimer and Wedbush among others raised the price target on Nvidia, citing that the chipmaker will benefit from strong sales of processors for cloud data centers and gaming PCs.

ETFs in Focus

Given the optimism, investors could focus on ETFs having the largest allocation to Nvidia. 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 - Free Report)

This fund follows the Indxx Global Robotics & Artificial Intelligence Thematic Index, which seeks to invest in companies that 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 has 31 stocks in its basket with Nvidia occupying the top spot holding 8.5%. The ETF has AUM of $1.7 billion and average daily volume of 834,000 shares. It charges 68 bps in annual fees (read: 3 Thematic ETFs to Rule in Pandemic-Stricken Q3).

iShares PHLX Semiconductor ETF (SOXX - Free Report)

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 8.7% share. The fund has amassed $3.5 billion in its asset base and charges a fee of 46 bps a year. It trades in a solid volume of 651,000 shares and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.

VanEck Vectors Video Gaming and eSports ETF (ESPO - Free Report)

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. The ETF holds 25 stocks and Nvidia takes the third spot with 7.9% share. American firms account for more than one-third of the portfolio, while Japan and China round off the next two with double-digit allocation each. The fund has gathered $422.2 million in its asset base while trading in average daily volume of 171,000 shares. It charges 55 bps in annual fees from investors.

Global X Video Games & Esports ETF (HERO - Free Report)

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 40 securities in its basket, Nvidia is the second firm accounting for 6.2% of assets. With AUM of $227.1 million, the fund charges 50 bps in annual fees and trades in average daily volume of 159,000 shares (read: 5 ETFs to Play Record-Breaking U.S. Gaming Sales in Q2).

VanEck Vectors Semiconductor ETF (SMH - Free Report)

This ETF has AUM of $2.7 billion and average daily volume of about 3.3 million shares. The fund provides exposure to 25 global semiconductor securities by tracking the MVIS US Listed Semiconductor 25 Index. Nvidia occupies the second spot with 8.7% of the assets. While the American firms dominate the fund’s holdings with 74.8% assets, Taiwan (14.5%), the Netherlands (8.5%) and Switzerland (2.3%) 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.

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