We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
High Hopes May Slow AI Ride: Are ETFs Better Bets Than Stocks?
Read MoreHide Full Article
By now, the AI frenzy is known to all thanks to Nvidia’s (NVDA - Free Report) immense run since reporting upbeat earnings and offering superb guidance on AI strength. In fact, on May 30, Nvidia joined the elite club of Wall Street — the one trillion market-cap holders — for a brief period. Notably, Nvidia’s shares jumped about 30% in the four days following its earnings release. In any case, Nvidia shares are firing on all cylinders this year and the stock is up about 170%.
For the second quarter of fiscal 2024, the graphics chipmaker expects revenues of around $11 billion, plus or minus 2% on increased demand for its data-center family of products. Nvidia’s graphics processing units, or GPUs, are key to generative AI platforms like OpenAI’s ChatGPT and Google’s Bard.
Nvidia’s success acted as a cornerstone for the entire AI as well as semiconductor space. No wonder, Global X Artificial Intelligence & Technology ETF (AIQ - Free Report) is up 36% in the past five days.
Is Everything Rosy?
Not really. The C3.ai (AI - Free Report) stock — a beneficiary of the Nvidia rally — gained 43.7% for five days only to nosedive on May 31 on underwhelming guidance. The stock was off 9% on May 31 and lost 21.3% after hours, even after beating expectations on the top and bottom lines.
However, C3.ai's projected revenues for the entirety of fiscal 2024 seemed to fall short of the expectations set by Wall Street. Following Nvidia's impressive achievement, investors exhibited severe scrutiny of C3.ai on Wednesday.
The company anticipates a revenue range of $295 million to $320 million, whereas data from S&P Global Market Intelligence indicated that analysts are anticipating revenues closer to $321 million for the fiscal year, as quoted on Yahoo.
Road Ahead Looks Rough for Nvidia Too
NVDA shares lost about 5% on May 31. ARK Invest CEO Cathie Wood tweeted that Nvidia's shares are too pricey and is “priced ahead of the curve,” as quoted on Businessinsider.com. It seems that investors who don’t have a strong stomach for risks, jumped into profit booking.
How to Move Ahead?
Investors intending to ride NVDA’s AI-growth story but still wary of the high valuation may take the ETF route. This is because ETFs help investors to mitigate one stock’s average performance with other stocks’ stellar performances.
Below, we highlight a few ETFs with heavy exposure to Nvidia for investors seeking to bet on the stock with much lower risk.
VanEck Semiconductor ETF (SMH - Free Report) ) – about 15% Exposure to NVDA
AXS Esoterica NextG Economy ETF (WUGI - Free Report) ) – about 14% focus on NVDA
Simplify Volt RoboCar Disruption and Tech ETF ) – about 10% focus on NVDA
Software Providers: Next AI Bet?
According to Cathie Wood, the next beneficiaries of the artificial intelligence craze fueled by Nvidia will be software providers, per the abovementioned source. The Zacks Rank #1 (Strong Buy) SPDR S&P Software & Services ETF (XSW) is a great bet here.
Notably, Wood likes UiPath Inc. (PATH), which was up 8% on May 31. It is an end-to-end platform for automation, combining Robotic Process Automation solution for digital business operations. ARK Autonomous Technology & Robotics ETF (ARKQ - Free Report) has a considerable focus on PATH.
.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
High Hopes May Slow AI Ride: Are ETFs Better Bets Than Stocks?
By now, the AI frenzy is known to all thanks to Nvidia’s (NVDA - Free Report) immense run since reporting upbeat earnings and offering superb guidance on AI strength. In fact, on May 30, Nvidia joined the elite club of Wall Street — the one trillion market-cap holders — for a brief period. Notably, Nvidia’s shares jumped about 30% in the four days following its earnings release. In any case, Nvidia shares are firing on all cylinders this year and the stock is up about 170%.
For the second quarter of fiscal 2024, the graphics chipmaker expects revenues of around $11 billion, plus or minus 2% on increased demand for its data-center family of products. Nvidia’s graphics processing units, or GPUs, are key to generative AI platforms like OpenAI’s ChatGPT and Google’s Bard.
Nvidia’s success acted as a cornerstone for the entire AI as well as semiconductor space. No wonder, Global X Artificial Intelligence & Technology ETF (AIQ - Free Report) is up 36% in the past five days.
Is Everything Rosy?
Not really. The C3.ai (AI - Free Report) stock — a beneficiary of the Nvidia rally — gained 43.7% for five days only to nosedive on May 31 on underwhelming guidance. The stock was off 9% on May 31 and lost 21.3% after hours, even after beating expectations on the top and bottom lines.
However, C3.ai's projected revenues for the entirety of fiscal 2024 seemed to fall short of the expectations set by Wall Street. Following Nvidia's impressive achievement, investors exhibited severe scrutiny of C3.ai on Wednesday.
The company anticipates a revenue range of $295 million to $320 million, whereas data from S&P Global Market Intelligence indicated that analysts are anticipating revenues closer to $321 million for the fiscal year, as quoted on Yahoo.
Road Ahead Looks Rough for Nvidia Too
NVDA shares lost about 5% on May 31. ARK Invest CEO Cathie Wood tweeted that Nvidia's shares are too pricey and is “priced ahead of the curve,” as quoted on Businessinsider.com. It seems that investors who don’t have a strong stomach for risks, jumped into profit booking.
How to Move Ahead?
Investors intending to ride NVDA’s AI-growth story but still wary of the high valuation may take the ETF route. This is because ETFs help investors to mitigate one stock’s average performance with other stocks’ stellar performances.
Below, we highlight a few ETFs with heavy exposure to Nvidia for investors seeking to bet on the stock with much lower risk.
VanEck Semiconductor ETF (SMH - Free Report) ) – about 15% Exposure to NVDA
AXS Esoterica NextG Economy ETF (WUGI - Free Report) ) – about 14% focus on NVDA
Simplify Volt RoboCar Disruption and Tech ETF ) – about 10% focus on NVDA
Software Providers: Next AI Bet?
According to Cathie Wood, the next beneficiaries of the artificial intelligence craze fueled by Nvidia will be software providers, per the abovementioned source. The Zacks Rank #1 (Strong Buy) SPDR S&P Software & Services ETF (XSW) is a great bet here.
Notably, Wood likes UiPath Inc. (PATH), which was up 8% on May 31. It is an end-to-end platform for automation, combining Robotic Process Automation solution for digital business operations. ARK Autonomous Technology & Robotics ETF (ARKQ - Free Report) has a considerable focus on PATH.
.