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NVIDIA Earnings Report Puts These ETFs in Focus

Sweta Killa

NVIDIA NVDA reported third-quarter fiscal 2020 results after the market close yesterday, wherein both its earnings and revenues surpassed the Zacks Consensus Estimate. However, the company issued soft revenue guidance for the ongoing quarter. Shares of NVIDIA initially gained 2% in after-hours trading but soon declined and eventually ended in the red territory thanks to soft guidance (read: 9 High-Flying ETFs of 2019).

Earnings per share came in at $1.78, beating the Zacks Consensus Estimate significantly by 21 cents but declining from the year-ago quarter of $1.84. Moreover, revenues dropped 5% year over year to $3 billion but outpaced the consensus mark of $2.90 billion. Better-than-expected results came on the back of strong demand in gaming business and solid growth in its fast-growing data center business.

NVIDIA expects revenues of approximately $2.95 billion (+/-2%) for the fourth quarter of fiscal 2020 compared with $2.21 billion in the year-ago quarter. This suggests a return to revenue growth after four quarters of declines (see: all the Technology ETFs here).

The stock currently has a Zacks Rank #3 (Hold) and an unattractive VGM Score of D. It falls within an unfavorable Zacks industry (placed at the bottom 35% of 250+ industries).

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:

VanEck Vectors Video Gaming and eSports ETF ESPO

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 8.7% share. American firms account for one-third of the portfolio, while Japan and China round off the next two with a double-digit allocation. The fund has gathered $42 million in its asset base while trading in average daily volume of 12,000 shares. It charges 55 bps in annual fees from investors.

iShares PHLX Semiconductor ETF SOXX

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 top spot with 8.7% allocation. The fund has amassed $2.1 billion in its asset base and charges a fee of 46 bps a year. It trades in a solid volume of 632,000 shares and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Semiconductor ETFs Riding High on Solid Earnings).

Global X Robotics & Artificial Intelligence ETF BOTZ

This fund follows the Indxx Global Robotics & Artificial Intelligence Thematic Index, which seeks to invest in companies that potentially stand to benefit from increased adoption and utilization of robotics and AI, including those involved with industrial robotics and automation, non-industrial robots, and autonomous vehicles. It holds 37 stocks in its basket with NVIDIA occupying the top spot at 8.6% allocation. The ETF has AUM of $1.5 billion and an average daily volume of 642,000 shares. It charges 68 bps in annual fees (read: ETFs to Gain as Surgical Robots Rise in Popularity).

Global X Video Games & Esports ETF HERO

This ETF offers exposure to companies that develop or publish video games, facilitate the streaming and distribution of video gaming or esports content, own and operate within competitive esports leagues, or produce hardware used in video games and esports, including augmented and virtual reality. This can be easily done by the Solactive Video Games & Esports Index. Holding 39 securities in its basket, NVIDIA is the top firm accounting for 6.3% of assets. The fund charges 50 bps in annual fees and trades in average daily volume of 2,000 shares.

VanEck Vectors Semiconductor ETF SMH

This ETF has AUM of $1.4 billion and average daily volume of about 5.7 million shares. The fund provides exposure to 25 global semiconductor securities by tracking the MVIS US Listed Semiconductor 25 Index. NVIDIA occupies the third spot with 5.8% of the assets. While the American firms dominate the fund’s holdings with 74.8% assets, Taiwan (13.4%), the Netherlands (9.5%) and Switzerland (2.2%) 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 with a High risk outlook.

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