Betting on Nvidia: 3 ETFs to Own for Exposure to the AI Giant


ETFs with Nvidia Exposure - Betting on Nvidia: 3 ETFs to Own for Exposure to the AI Giant

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Artificial intelligence heavyweight Nvidia (NASDAQ:NVDA) is about to announce its highly anticipated first-quarter fiscal year 2025 earnings after Wednesday’s market close.

Understandably, Wall Street is keeping a close eye on how NVDA stock moves after the announcement. Over the past year, Nvidia has emerged as a powerhouse in the tech sector, riding high on the AI wave. Its cutting-edge chips power AI Large Language Models like ChatGPT, fostering unprecedented demand.

Analysts point out how the numbers speak volumes about Nvidia’s staggering growth trajectory. In fact, from fiscal 2023 to fiscal 2024, the company’s revenue skyrocketed from $27 billion to a record $60.9 billion. Such a meteoric rise has catapulted Nvidia’s stock, registering a phenomenal 239% surge in 2023 and about an additional 97% since January, firmly establishing it as one of Wall Street’s largest companies.

With analysts maintaining their bullish outlook and predicting triple-digit increases in revenue and earnings for the upcoming report, let’s now discuss three top-tier ETFs with Nvidia exposure. These exchange-traded funds provide investors with a convenient exposure to Nvidia’s imminent earnings announcement.

ERShares Entrepreneur ETF (ENTR)

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Entrepreneurship drives economic growth, spurring innovation and job creation across sectors like e-commerce, fintech, healthcare and entertainment. The Center for American Progress highlights that the startup ecosystem is booming stateside.

For investors eyeing a slice of new businesses, the ERShares Entrepreneur ETF (NASDAQ:ENTR) stands out as a top choice. This exchange-traded fund targets dynamic U.S. businesses led by innovative entrepreneurs. As a result, it provides investors with a strategic opportunity to also tap into Nvidia’s growth potential within the flourishing entrepreneurial landscape.

Designed to mirror the Entrepreneur 30 Index, ENTR selects top-tier companies based on momentum, sector, growth, value, leverage, market cap and demographic orientation. Initially launched as the ERShares Entrepreneur 30 ETF in November 2017, it was renamed the ERShares Entrepreneur ETF in February 2021.

With a market value of approximately $85 million, ENTR maintains a concentrated portfolio of 43 holdings, with the top 10 stocks comprising nearly 40% of assets. Notable constituents include Nvidia, Super Micro Computer (NASDAQ:SMCI), Crowdstrike (NASDAQ:CRWD), Antero Resources (NYSE:AR) and Resmed (NYSE:RMD).

With heavy allocations in Information Technology at 51%, Health Care at 14% and Consumer Discretionary at 13%, the fund offers diversification across high-growth companies. Many of these businesses have gone public in recent years. Yet, they still have one or several of their founding executives on their boards.

Year-to-date, ENTR has advanced 17%, currently changing hands at 42.3 times trailing earnings. With a gross expense ratio of 0.75%, this ETF offers a potential means to ride the wave of innovation and growth.

iShares U.S. Technology ETF (IYW)

iShares by Blackrock sign
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Technology stocks have led the market to new highs in 2024, and many are poised to continue their AI-driven momentum. Global AI revenue is projected to exceed $400 billion within the next three years. Therefore, UBS (NYSE:UBS) suggests investing in companies along the AI value chain, spanning data centers, semiconductors and the internet.

That’s why next up on our list of ETFs with Nvidia exposure is the iShares U.S. Technology ETF (NYSEARCA:IYW). Launched in May 2000, it provides access to leading U.S. technology firms.

The fund’s portfolio consists of 131 stocks, with the top 10 holdings accounting for approximately 65% of its $17 billion in net assets. In terms of subsectors, we see Software & Services at 39%, followed by Semiconductors & Semiconductor Equipment at 30%, Tech Hardware & Equipment at 19, and Media & Entertainment at 10%.

This diversified strategy offers exposure to a broad spectrum of technology enterprises, from established leaders to emerging innovators. Leading companies include Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Nvidia, Meta Platforms (NASDAQ:META) and Broadcom (NASDAQ:AVGO).

IYW stock has gained more than 17% since January. It currently trades at 42.2 times trailing earnings. Potential investors should note the expense ratio of 0.4% and dividend yield of 0.34%. Currently, IYW presents a convenient way for investors to capture the growth potential of Nvidia and the broader technology sector.

VanEck Semiconductor ETF (SMH)

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Semiconductors are the backbone of modern technology, driving progress in fields such as communications, computing and healthcare. The global semiconductor market is projected to surpass $2 trillion by 2032 from $681 billion in 2024. And Nvidia’s stronghold in the AI chip market positions it well for leadership among semiconductor shares.

Our final pick among the best ETFs with Nvidia exposure is the VanEck Semiconductor ETF (NASDAQ:SMH), which offers diversified access to the semiconductor sector. This ETF was first listed in December 2011 and manages $19 billion in net assets.

Currently, the SMH fund holds a portfolio of 26 stocks, with the top 10 stocks comprising approximately three-quarters of total assets under management. We should note that it is a top-heavy ETF where NVDA comprises over a fifth of the portfolio. Other major holdings include Taiwan Semiconductor Manufacturing (NYSE:TSM), Broadcom, Qualcomm (NASDAQ:QCOM) and Texas Instruments (NASDAQ:TXN). At present, U.S.-based businesses dominate the ETF with a 77.7% weighting, followed by Taiwan 12.6% and the Netherlands at 6.8% and others.

So far in 2024, SMH has gained about 40%. Meanwhile, the fund’s trailing price-to-earnings and price-to-book ratios stand at 20.45x and 6.8x, respectively. Additionally, it has a 0.35% net expense ratio and comes with a modest dividend yield of 0.45%.

On the date of publication, Tezcan Gecgil held both long and short positions in NVDA and META. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Tezcan Gecgil, PhD, began contributing to InvestorPlace in 2018. She brings over 20 years of experience in the U.S. and U.K. and has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Publicly, she has contributed to and the U.K. website of The Motley Fool.

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