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ETFs to Tap as NVIDIA Becomes the Most Valuable Company

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In a historic milestone, NVIDIA (NVDA - Free Report) rallied further to become the world's most valuable company, surpassing Microsoft (MSFT). The artificial intelligence (AI) chipmaker topped $3.33 trillion in market value on Jun 18 compared with the software giant's $3.31 trillion market cap. NVIDIA has enjoyed a monumental ascent over the last 18 months. It hit the $1 trillion mark in May 2023 and reached $2 trillion by February 2024, surpassing Amazon (AMZN) and Alphabet (GOOGL). The chipmaker further overtook Apple (AAPL) earlier this month (read: NVIDIA Overtakes Apple: ETFs to Tap the Incredible Growth Story).

The stock has risen 173% so far this year and is expected to rise further. Most analysts believe NVIDIA will become far more valuable in the future due to its dominance in the billion-dollar AI chip market.

More Growth on the Way

NVIDIA has been at the forefront of technology companies racing to build AI into their products and services. Its success is largely attributed to its leadership in developing advanced graphics processing units (GPUs), which are unmatched in producing processors that power artificial intelligence systems, including generative AI, the technology backing OpenAI’s ChatGPT that can create text, images and other media. Major cloud service providers rely on NVIDIA’s GPUs to train and run AI applications. The company’s clients include around 20,000 start-ups, along with big names like Microsoft, Alphabet and Amazon. The company holds an 80% market share in AI chips for data centers.

NVIDIA founder and CEO Jensen Huang said, “The next industrial revolution has begun — companies and countries are partnering with NVIDIA to shift the trillion-dollar traditional data centers to accelerated computing and build a new type of data center — AI factories — to produce a new commodity: artificial intelligence.”

Demand for NVIDIA’s H100 accelerators has been on a surge that helped it to reach the historic milestone. Its next-generation GPU chip is expected to drive another round of massive growth. Early this month, the AI chipmaker unveiled a high-powered version of its Blackwell chip — called the Blackwell Ultra — slated to release in 2025, followed by a new AI chip platform, Rubin, in 2026. The company will debut an Ultra version of Rubin in 2027. Its first Blackwell processors are slated for delivery later this year, replacing the widely popular Hopper generative AI chips.

Further, NVIDIA completed a 10-for-1 stock split on Jun 7, which made its shares more affordable to a wider range of investors, including the ones who make small trades, thereby increasing liquidity and sparking a retail frenzy. The stock split also likely paved the way for NVIDIA’s inclusion in the Dow Jones Industrial Average, like Amazon (AMZN), which joined the index earlier this year after undergoing a 20-for-1 stock split in June 2022 (read: ETFs to Tap on NVIDIA's 10-for-1 Stock Split Retail Frenzy).

Bullish Analysts

After the stock's epic run to a $3 trillion market cap, one Wall Street analyst expects NVIDIA to reach nearly $5 trillion. Rosenblatt Securities analyst Hans Mosesmann reiterated his buy rating on the stock and increased his price to $200 from $140. This represents a potential upside of 53% from the Jun 17 closing price and would push the chipmaker’s market cap within striking distance of $5 trillion. Wedbush analysts said that NVIDIA’s AI-optimized chips are "in essence the new gold or oil in the tech sector" as an increasing number of businesses embrace the nascent technology (read: Nvidia ETFs: Is There More Room to Run?).

Some analysts believe NVIDIA is on track to become the first $10 trillion company. Writing for Forbes, Beth Kindig, CEO and lead tech analyst for the I/O Fund, stated that NVIDIA could reach this milestone by 2030 or sooner, citing the company’s rapid product development, the strength of its CUDA software platform and its expansion beyond GPUs into networking and software platforms.

ETFs Riding High

While there are many ETFs in the space that are capitalizing on the solid growth of NVIDIA, we have highlighted those that have the largest allocation to the AI chipmaker.   

Strive U.S. Semiconductor ETF (SHOC - Free Report) – Up 35.6% YTD, NVIDIA exposure: 27.8%

AXS Esoterica NextG Economy ETF (WUGI - Free Report) – Up 38.7% YTD, NVIDIA exposure: 26.4%

Grizzle Growth ETF (DARP - Free Report) – Up 24.4% YTD, NVIDIA exposure: 26.1%

VanEck Vectors Semiconductor ETF (SMH - Free Report) – Up 58.3% YTD, NVIDIA exposure: 24.6%

TrueShares Technology, AI and Deep Learning ETF (LRNZ - Free Report) – Up 1.4% YTD, NVIDIA exposure: 19.4%

T-REX 2X Long NVIDIA Daily Target ETF (NVDX - Free Report) – Up 526% YTD, NVIDIA exposure: 200%

GraniteShares 2x Long NVDA Daily ETF (NVDL - Free Report) – Up 470.9% YTD, NVIDIA exposure: 200%

Bottom Line

As NVIDIA continues to innovate and expand its product offerings, the company's valuation is expected to remain robust, solidifying its position as a dominant force in the tech industry. The achievement of becoming the world's most valuable company is a testament to NVIDIA's strategic vision and its pivotal role in shaping the future of technology. The abovementioned ETFs will continue to enjoy a huge rally with NVIDIA’s surge.

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