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Nvidia ETFs in Focus Ahead of Q3 Earnings

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Graphics chipmaker Nvidia (NVDA - Free Report) is set to release third-quarter fiscal 2022 results on Nov 17, after market close. NVIDIA has been rallying over the past three months, reaping gains of 50.5% and outperforming the industry average of 21.5%. This uptrend is likely to continue given that the chipmaker has a potential to beat estimates in its Q3 report.

Given the higher chances of an earnings beat, ETFs having the largest allocation to Nvidia could make compelling plays ahead of its earnings report. These include VanEck Vectors Semiconductor ETF (SMH - Free Report) , VanEck Vectors Video Gaming and eSports ETF (ESPO - Free Report) , Invesco PHLX Semiconductor ETF (SOXQ - Free Report) and iShares Semiconductor ETF (SOXX - Free Report) .


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Earnings Whispers

Nvidia currently has a Zacks Rank #2 (Buy) and an Earnings ESP of +1.06%. According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

This videogame-gear specialist saw no earnings estimate revision over the past 30 days for the third quarter of fiscal 2022. Nvidia’s earnings surprise history is solid. However, it delivered an earnings surprise of 9.63%, on average, in the last four quarters. Additionally, NVDA is expected to post robust earnings and revenue growth of 52% and 44.6%, respectively, for the to-be-reported quarter (read: Semiconductor ETFs Flying High on Slew of Q3 Earnings Beat).


NVIDIA Corporation Price, Consensus and EPS Surprise  

NVIDIA Corporation Price, Consensus and EPS Surprise


NVIDIA Corporation price-consensus-eps-surprise-chart | NVIDIA Corporation Quote

The Zacks Consensus Estimate for the average target price is $256.76 with nearly 88% of the analysts giving a Strong Buy or a Buy rating ahead of NVDA earnings.

What to Watch?

Many analysts, including Oppenheimer and Wedbush, have raised the target price before the earnings announcement given its growth potential. However, a few have downgraded the stock as well, citing higher valuation. Nvidia currently trades at P/E of 73.39 compared to the industry average of 22.93.

Nvidia provided revenue guidance of $6.80 billion (+/-2%) for the fiscal third quarter. The chipmaker is expected to see continued momentum in the gaming business into the second half led by new gaming titles, and the back-to-school and holiday seasons (read: Grab Retail ETFs on Upbeat Holiday Sales Forecast).

ETFs in Focus

Let’s delve into each ETF below:

VanEck Vectors Semiconductor ETF

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 tracks the most-liquid companies in the industry based on market capitalization and trading volume. VanEck Vectors Semiconductor ETF holds 25 stocks in its basket with Nvidia occupying the second position at 19%.  

VanEck Vectors Semiconductor ETF has managed assets worth $6.7 billion and charges 35 bps in annual fees and expenses. SMH is heavily traded with volume of 3.2 million shares per day and has a Zacks ETF Rank #1 with a High risk outlook.

VanEck Vectors Video Gaming and eSports ETF

VanEck Video Gaming and eSports ETF 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. ESPO holds 26 stocks, with NVIDIA taking the second spot with 9.3% share. VanEck Video Gaming and eSports ETF is tilted toward American firms, which account for 44.7% of the portfolio, while Japan and China round off the next two with double-digit allocations each.

VanEck Video Gaming and eSports ETF has gathered $671 million in its asset base while trading in an average daily volume of 80,000 shares. ESPO charges 55 bps in annual fees from investors (read: How Are Activision ETFs Reacting to Q3 Earnings Results?).

Invesco PHLX Semiconductor ETF

Invesco PHLX Semiconductor ETF offers exposure to the 30 largest U.S.-listed securities of companies engaged in the semiconductor business. SOXQ tracks the PHLX Semiconductor Sector Index with Nvidia occupying the top position with 9.5% share in the basket. Invesco PHLX Semiconductor ETF is dominated by American firms with 88.5% allocation.

Invesco PHLX Semiconductor ETF debuted in the space in June and has accumulated $70.8 million in its asset base. SOXQ came up with zero fees and trades in an average daily volume of 26,000 shares.

iShares Semiconductor ETF

iShares Semiconductor ETF has a targeted access to domestic semiconductor stocks. SOXX offers exposure to companies that design, manufacture and distribute semiconductors. iShares Semiconductor ETF tracks the iShares Semiconductor ETF, holding 30 stocks in its basket. Of these, NVIDIA takes the top position with 9.7% share.

iShares Semiconductor ETF has amassed $8.7 billion in its asset base and charges a fee of 43 bps a year. SOXX trades in a solid volume of 869,000 shares and has a Zacks ETF Rank #1 with a High risk outlook.

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