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Why to Buy Nvidia Even After 212% YTD Jump? ETFs in Focus
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The NVIDIA (NVDA - Free Report) stock is a blockbuster this year as it has skyrocketed 212% courtesy of high hopes from artificial intelligence (AI). A surge in Hyperscale demand and a solid uptake of AI-based smart cockpit infotainment solutions are acting as tailwinds.
While big tech giants have binged on large language model (LLM) AI, NVIDIA recently revealed a new AI chip that will lower the cost of running LLMs significantly, per a CNBC article. “This processor is designed for the scale-out of the world’s data centers,” NVIDIA CEO Jensen Huang said Tuesday, CNBC quoted.
The revelation comes at a time when NVIDIA's main competitor in the GPU market, AMD, has also unveiled its latest AI-focused semiconductor, the MI300X. This leading-edge chip boasts a 192GB memory capacity and is strategically positioned for its exceptional prowess in AI inference tasks. Furthermore, major players like Google and Amazon are actively developing their personalized AI chipsets to boost inference capabilities.
Still, currently, NVIDIA rules the AI chip market with over 80% market share, according to some estimates, quoted on CNBC. However, the availability of NVIDIA's chips is currently limited, as major tech giants, cloud service providers, and emerging startups all are eyeing GPU capacity for advancing their individual AI models.
How is NVIDIA’s Growth Prospects?
NVIDIA has a Zacks Rank #1 (Strong Buy) and it is a growth stock. NVIDIA’s expected growth rate for this year is expected to be 133.23% versus the semiconductor industry’s growth rate of a decline of 7.1% and 8.8% of the S&P 500’s growth rate. NVIDIA’s expected growth rate for 2024 is 38.25% versus the expected growth rate of 8% for the industry and 16.7% for the S&P 500.
What Does the Broker Rating Say?
NVIDIA currently has an average brokerage recommendation (ABR) of 1.24 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell etc.) made by 35 brokerage firms. The current ABR compares to an ABR of 1.28 a month ago based on 34 recommendations.
Of the 35 recommendations deriving the current ABR, 29 are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 82.86% and 8.57% of all recommendations. A month ago, Strong Buy made up 79.41%, while Buy represented 11.76%.
NVIDIA lacks on value. The stock has very high P/E and P/CF ratios. Against this backdrop, below we highlight a few NVIDIA-heavy ETFs so that investors can avoid company-specific concentration risks. After all, the semiconductor industry, as a whole, has a decent average brokerage recommendation.
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Why to Buy Nvidia Even After 212% YTD Jump? ETFs in Focus
The NVIDIA (NVDA - Free Report) stock is a blockbuster this year as it has skyrocketed 212% courtesy of high hopes from artificial intelligence (AI). A surge in Hyperscale demand and a solid uptake of AI-based smart cockpit infotainment solutions are acting as tailwinds.
While big tech giants have binged on large language model (LLM) AI, NVIDIA recently revealed a new AI chip that will lower the cost of running LLMs significantly, per a CNBC article. “This processor is designed for the scale-out of the world’s data centers,” NVIDIA CEO Jensen Huang said Tuesday, CNBC quoted.
The revelation comes at a time when NVIDIA's main competitor in the GPU market, AMD, has also unveiled its latest AI-focused semiconductor, the MI300X. This leading-edge chip boasts a 192GB memory capacity and is strategically positioned for its exceptional prowess in AI inference tasks. Furthermore, major players like Google and Amazon are actively developing their personalized AI chipsets to boost inference capabilities.
Still, currently, NVIDIA rules the AI chip market with over 80% market share, according to some estimates, quoted on CNBC. However, the availability of NVIDIA's chips is currently limited, as major tech giants, cloud service providers, and emerging startups all are eyeing GPU capacity for advancing their individual AI models.
How is NVIDIA’s Growth Prospects?
NVIDIA has a Zacks Rank #1 (Strong Buy) and it is a growth stock. NVIDIA’s expected growth rate for this year is expected to be 133.23% versus the semiconductor industry’s growth rate of a decline of 7.1% and 8.8% of the S&P 500’s growth rate. NVIDIA’s expected growth rate for 2024 is 38.25% versus the expected growth rate of 8% for the industry and 16.7% for the S&P 500.
What Does the Broker Rating Say?
NVIDIA currently has an average brokerage recommendation (ABR) of 1.24 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell etc.) made by 35 brokerage firms. The current ABR compares to an ABR of 1.28 a month ago based on 34 recommendations.
Of the 35 recommendations deriving the current ABR, 29 are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 82.86% and 8.57% of all recommendations. A month ago, Strong Buy made up 79.41%, while Buy represented 11.76%.
The ABR of 1.24 is pretty upbeat compared with 1.95 ABR held by the semiconductor industry and 9.99 ABR held by the S&P 500.
Any Caveat?
NVIDIA lacks on value. The stock has very high P/E and P/CF ratios. Against this backdrop, below we highlight a few NVIDIA-heavy ETFs so that investors can avoid company-specific concentration risks. After all, the semiconductor industry, as a whole, has a decent average brokerage recommendation.
ETFs in Focus
Zacks Rank #2 (Buy) VanEck Semiconductor ETF (SMH - Free Report) – NVIDIA has 19.84% Focus
AXS Esoterica NextG Economy ETF (WUGI - Free Report) – NVIDIA has 18.25% Exposure
Simplify Volt RoboCar Disruption and Tech ETF (VCAR - Free Report) – NVIDIA has 14.05% Exposure
Global X Robotics & Artificial Intelligence ETF (BOTZ - Free Report) – NVIDIA has 13.29% Exposure
Zacks Rank #2 Pacer Data and Digital Revolution ETF (TRFK - Free Report) – NVIDIA has 13.09% Exposure