NVIDIA NVDA reported exceptional first-quarter fiscal 2025 results, surpassing all expectations. Its data center revenues skyrocketed 427% year-over-year to $22.6 billion, fueled by the rapid adoption of AI technologies.
Microsoft MSFT, Amazon (AMZN) and Alphabet GOOGL accounted for around 45% of the company’s data center revenue.
Investors cheered CEO Jensen Huang’s comments regarding their latest chip, Blackwell. “We will see a lot of Blackwell revenue this year.” NVIDIA will launch new chips on an annual cycle.
The stock will start trading on a split-adjusted basis at market open on June 10. The split doesn’t change the company’s underlying value but can make it more appealing to retail investors. Moreover, it could be included in the price-weighted Dow after the split.
NVIDIA currently controls over 80% of the market for cutting-edge chips used to train and run large language models. Tech giants as well as AI startups have been frantically acquiring as many NVIDIA chips as they can.
The chip maker is seen as a big beneficiary of the funding into Elon Musk’s artificial intelligence start-up, which raised $6 billion in its latest venture round on Sunday.
While NVIDIA’s GPUs are unmatched for training AI models, chips from other companies like INTC and AMD AMD can be used for inference after models are trained.
NVIDIA also appears to have a dominant position in the inference market, but it could face competition in the coming years. Additionally, large technology companies are designing their own chips, which could reduce their reliance on NVIDIA.
However, what really sets NVIDIA apart from peers is its AI ecosystem, which includes its CUDA software and networking technology. Further, the company has access to a large share of TSMC’s TSM advanced manufacturing capabilities, and competitors may find it difficult to secure similar allocations.
Thanks to the surge in demand for its AI chips, NVIDIA’s shares have risen more than 120% this year, following a nearly 240% increase in 2023. However, its valuation does not seem overstretched, as earnings are growing faster than its share price.
NVIDIA’s meteoric surge has drawn some investors to single-stock ETFs that aim to double its daily return. The GraniteShares 2x Long NVDA Daily ETF NVDL has about $2.4 billion in assets, and the T-Rex 2X Long NVIDIA Daily Target ETF NVDX has gathered about $411 million.
I think these instruments can be effectively used as short-term tactical trading tools before or after earnings. However, investors should remember that these products are not meant for buy-and-hold investing and should be used only by those who closely monitor their portfolios.
Chip ETFs, like the VanEck Vectors Semiconductor ETF SMH and the iShares Semiconductor ETF SOXX, along with AI ETFs such as the Global X Robotics & Artificial Intelligence ETF BOTZ and the iShares Robotics and Artificial Intelligence Multisector ETF IRBO, are well-positioned to benefit as the AI boom continues.
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Intel Corporation (INTC) : Free Stock Analysis Report
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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
VanEck Semiconductor ETF (SMH): ETF Research Reports
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
iShares Semiconductor ETF (SOXX): ETF Research Reports
Global X Robotics & Artificial Intelligence ETF (BOTZ): ETF Research Reports
iShares Robotics and Artificial Intelligence Multisector ETF (IRBO): ETF Research Reports
GraniteShares 2x Long NVDA Daily ETF (NVDL): ETF Research Reports
T-REX 2X Long NVIDIA Daily Target ETF (NVDX): ETF Research Reports
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