After the closing bell yesterday, NVIDIA (NVDA) cheered investors with first-quarter fiscal 2019 results. Though this biggest maker of graphics processors missed on revenues, its earnings beat the Zacks Consensus Estimate. The company offered an upbeat guidance for the current fiscal year, buoyed by strong demand for its gaming chips and higher sales to data centers (read: Semiconductor ETF Tops in April: 5 Stocks Leading the Rally).
Shares of NVDA rose more than 7% initially following the earnings announcement in after-hours trading but lost most of the initial gains.
Q1 Earnings in Focus
Earnings per share came in at 88 cents, beating the Zacks Consensus Estimate by 6 cents but declining 57% from the year-ago quarter. Revenues dropped 31% year over year to $2.22 billion and also slightly missed the estimated figure of $2.25 billion.
NVIDIA expects revenues of approximately $2.55 billion (+/-2%) for the second quarter of fiscal 2020, much higher than the Zacks Consensus Estimate of $2.51 billion. It anticipates its graphics chip sales to benefit from a recovery in the gaming market. While Nvidia has been penetrating newer growth areas, such as data centers, artificial intelligence and self-driving cars, the company's key business remains selling chips that enhance video game graphics (see: all the Technology ETFs here).
NVIDIA currently has a Zacks Rank #3 (Hold) and a VGM Score of D. It falls within a top-ranked Zacks industry (top 41%).
ETFs to Watch
This has put ETFs with higher allocation to this graphics chipmaker under the spotlight. Below we have highlighted some of the funds:
ARK Industrial Innovation ETF (ARKQ - Free Report)
This is an actively managed ETF, seeking a long-term capital appreciation by investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research related to energy, automation and manufacturing, materials and transportation. This approach results in a basket of 35 stocks with NVDA occupying the third spot holding 8.8% share. The product has accumulated $167.3 million in its asset base and charges 75 bps in fees per year. It sees lower volume of about 25,000 shares a day.
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. Holding 25 stocks in its basket, NVIDIA takes the top spot with 8.4% share. American firms account for one-third of the portfolio while Japan, China and South Korea round off the next three with a double-digit allocation. The fund has gathered $22.5 million in its asset base while trading in average daily volume of 9,000 shares. It charges 55 bps in annual fees from investors (read: Video Gaming Industry Warming Up: Play These ETFs).
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, NVDA takes the fourth spot at 7.7% allocation. The fund has amassed $1.3 billion in its asset base and charges a fee of 47 bps a year. It trades in a solid volume of 763,000 shares and has a Zacks ETF Rank of 3 with a High risk outlook (read: China's Retaliation Puts These ETFs and Stocks in Focus).
ARK Web x.0 ETF (ARKW - Free Report)
This is an actively managed fund, focusing on companies expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 38 stocks in its basket with NVIDIA occupying the top position at 6.1%. The ETF has amassed $499.2 million in its asset base and trades in a good average daily volume of around 126,000 shares. Expense ratio comes in at 0.75%
VanEck Vectors Semiconductor ETF (SMH - Free Report)
This ETF has AUM of $994.2 million and average daily volume of about 7 million shares. The fund provides exposure to 25 global securities by tracking the MVIS US Listed Semiconductor 25 Index. NVIDIA occupies the fifth spot with 5.7% of the assets. While the American firms dominate the fund’s holdings with 79.3% assets, the Netherlands (9.6%), Taiwan (9.4%) and Switzerland (1.7%) round off the top four slots in terms of its country exposure. The fund charges an expense ratio of 0.35%. It has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Trade-Sensitive Sector ETFs in Focus on New Tariff Threat).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>