Investors Piled Into ETFs to Bet on Nvidia’s Earnings. It Paid Off
(Bloomberg) — Nvidia Corp. is delivering a bonanza to investors who piled into a handful of exchange-traded funds to wager that the chipmaker would deliver another earnings-season blowout.
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The VanEck Semiconductor ETF (Ticker SMH), which pulled in some $324 million on Wednesday ahead of Nvidia’s release, rose nearly 7% Thursday, its biggest one-day jump since May.
Exotic funds that do nothing but place leveraged bets on Nvidia stock did even better. The GraniteShares 2x Long NVDA Daily ETF (NVDL) — which saw its trading volume jump to a record of more than 3 million shares — surged as much as 31%, as did the T-Rex 2X Long NVIDIA Daily Target ETF (NVDX), which follows a similar strategy.
The chipmaker’s forecast for another quarter of big revenue gains breathed fresh life into the euphoria about artificial intelligence that’s been powering the stock market’s rally. The company’s gain rippled across Wall Street, pushing up major indexes and the shares of other chipmakers.
“It’s definitely the bullish optimism with Nvidia but also the entire semiconductor space,” said Mohit Bajaj, director of ETFs at WallachBeth Capital. “Broadcom and AMD have performed well and there is sentiment that AI will lead the Nasdaq higher.”
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The excitement extended the sharp increase in trading activity across ETFs tied to Nvidia, the best performing stock in the S&P 500 Index.
The VanEck Semiconductor ETF, which has about one-fourth of its funds in Nvidia, has swelled to more than $15 billion after a three day influx of $612 million. It’s on track for its biggest weekly haul since October 2022.
Trading volume in shares of GraniteShares’s NVDL set back-to-back daily records on Wednesday and Thursday, and its $236 million inflow this month is set to be the biggest since the $660 million fund’s 2022 inception. Activity in T-Rex’s NVDX and the Leverage Shares 3x NVIDIA ETP (NVD3) are also up sharply.
Investors also added a net $405 million to the $8.6 billion Direxion Daily Semiconductors Bull 3x Shares (SOXL), a fund that gives investors 3 times the return of an index that includes Nvidia. Its share price jumped as much as 16% to its highest since March 2022.
“If there was ever a day to plow into leveraged exposure to NVDA, it’s now,” said Steve Sosnick, chief strategist at Interactive Brokers.
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