How To Leverage ASX ETFs To Participate In The Nvidia Juggernaut

Investors who acquired shares in the US chip company Nvidia popped champagne corks as the stock price rocketed a whopping 410% in 2023. The stock price is driven by AI demand. Investors could gain exposure through certain ASX-traded ETFs.

Nvidia’s quarterly results and profit outlook exceeded expectations this week.

Why is the Nvidia stock price up so high?

Simply, Nvidia dominates the supply of graphics processing units (GPUs) that perform artificial intelligence calculations.

With a reported 80% of the market, competitors are scrambling to develop AI chips. Until they do, Nvidia sets prices, demand is rocketing, and the share price and its market capitalisation continue to surge to almost unfathomable levels in the short term.

Editors Note: The following article was first published on 15 February 2024.

How long the run lasts is anybody’s guess. Up a further 40% this year and with a market cap of US$1,825 billion these are heady days in terms of valuation multiples for Nividia. It would be no surprise to see some pull-back.

For believers and there are plenty of bulls, analysts at quant group Susquehanna see further beats on revenue in the next quarter.

There are alternatives to an outright share purchase of Nvidia stock to reduce risk.

ASX Exchange Traded Fund (ETF)

A more measured approach is to buy a global equity ETF traded on the ASX that has Nvidia among its holdings.

A portfolio that has other stocks diversifies risk. It might reduce returns but mitigates risk. One such ETF is operated by fund manager Global X.

Global X Semiconductor ETF (ASX: SEMI)

This ASX-listed long equity ETF has a fund weighting of 11.74% in Nvidia among 30 stocks.

With that, the SEMI ETF price has surged 24.8% for the past three months and up a heady 68.3% for 12 months. No surprise that this result has SEMI in the top 5 ASX ETF gainers for 12 months.

SEMI seeks to provide investment results that correspond generally to the price and yield performance, of the Solactive Global Semiconductor 30 Index.

The premise of the SEMI ETF is that the world’s next generation of innovative technology will require semiconductors to power it.

Semiconductors extend far beyond personal computers, reaching an ever-multiplying number of devices and applications.

It surmises the Internet of Things (IoT) connections could double to 26.4 billion by 2026 which is one of many categories that require semiconductors to operate.

SEMI has Assets Under Management (AUM) of $172.76 million and a management fee of 0.45% per annum.

Another ASX ETF with a weighting in Nvidia is one operated by fund manager Betashares.

Global Robotics and Artificial Intelligence ETF (ASX: RBTZ)

RBTZ aims to track the performance of an index (before fees and expenses) that includes global companies involved in the production or use of robotics and AI products and services.

The long global equity RBTZ has a holding in Nvidia and a weighting of 20.4% in the portfolio.

With a wider brief than Global X’s SEMI ETF, it tracks the Global Robotics & Artificial Intelligence Thematic Index.

RBTZ invests in companies involved in Industrial Robotics and Automation, Non-Industrial Robots, Artificial Intelligence and Unmanned Vehicles and Drones.

The three-month performance gain for the RBTZ ETF is 20.4%, while it has logged a one-year return to date of 30%.

Net assets of the ETF are $231 million and a management fee of 0.57% per annum.

There you have it. Some ASX traded counters that provide a handy exposure to Nvidia.

Remember to do your research. When a stock price climbs in the order of magnitude that Nvidia has, the risk and return profile is altered.

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