Dear NVDA Stock Fans, Get Ready for Some Big ETF Moves


  • Shares of tech giant Nvidia (NVDA) are continuing their relentless march higher.
  • A potentially upcoming rebalancing of a key tech-centric ETF could spark upward pressure.
  • NVDA stock recently attracted robust bullish price targets.
NVDA stock - Dear NVDA Stock Fans, Get Ready for Some Big ETF Moves

Source: Evolf /

While semiconductor juggernaut Nvidia (NASDAQ:NVDA) lacks no upside catalysts these days, it’s potentially about to receive another one. According to Bloomberg, one of the leading tech-centric exchange-traded funds (ETFs) stands poised for a major rebalancing. If so, that could benefit NVDA stock — and come at the expense of consumer electronics stalwart Apple (NASDAQ:AAPL) — in just one move.

Unless a last-minute change of plans stems index provider S&P Dow Jones Indices, the owner of the Technology Select Sector SPDR Fund (NYSEARCA:XLK) — one of the arms under State Street (NYSE:STT) — could be set to revamp the ETF’s composition. This potential action is in the spotlight because the market value of NVDA stock finished above AAPL on Friday.

What’s significant here is that per Bloomberg:

“XLK has held way fewer Nvidia shares even as the AI giant soared 166% year-to-date. When the chipmaker ranked in third place, it made up roughly 6% of the ETF’s assets, compared with 22% in the S&P 500 Information Technology Index. The ownership cap, imposed under diversification rules, has caused XLK to underperform massively this year.”

In terms of weighting, the positions between NVDA stock and AAPL in the ETF may reverse. The former may rise to above 20% while the latter may drop to 4.5%.

Analysts Become Even More Bullish on NVDA Stock

In terms of numbers, State Street will essentially be scheduled to acquire $11 billion worth of NVDA stock. Conversely, based on one estimate of what may materialize, it will dump $12 billion of Apple shares.

Chris Harvey, head of equity strategy at Wells Fargo Securities, stated:

“By our calculation, the flip-flop between Nvidia and Apple will occur. This aligns the XLK ETF more closely with the momentum trade and semis. At the margin, it’s more dollars chasing a stock that does not need any additional help.”

A few analysts wasted little time in pounding the table on NVDA stock. Per TipRanks, Aaron Rakers of Wells Fargo issued a “buy” rating on the semiconductor giant with a price target of $155. That implies about a 15% upside from the time of writing.

The title of the most bullish analyst, though, goes to Hans Mosesmann of Rosenblatt Securities. The expert pegged NVDA stock as a “buy” with a staggering $200 price target. That implies roughly 49% upside potential. So far, it’s the strongest forecast by quite a margin, with second place belonging to Rakers.

Interestingly, though, the present consensus comes in as a strong buy with a price target of $126.88, implying approximately 6% downside risk.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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