Nvidia's Earnings Will Pace AI, Semiconductor ETFs

Investors exhaled last week after the government reported that U.S. inflation was better-than-feared in April.

But while stocks are back at record highs, investors are likely a little bit nervous ahead of arguably the most important earnings report of the first quarter—Nvidia’s.

The A.I. chipmaker is scheduled to release first-quarter results on Wednesday after the markets close. With the stock up 91% since the start of the year, expectations are a bit high.

Any surprises in Nvidia’s report will effect the stock and the 501 U.S.-listed exchange-traded funds that hold it.

Analysts expect that Nvidia will report earnings per share of $5.65 and revenues of $24.68 billion for Q1.

Matching those numbers may not satisfy Nvidia bulls. In the fourth quarter, Nvidia topped revenue estimates by 8%, while it beat by 13% in the quarter before that.

According to Susquehanna analyst Chris Rolland, the company will need to top the Q1 consensus sales estimate by $1.5 billion, or 6%, to keep the stock flat after earnings.

That “whisper number” is notably higher than the analyst consensus, but the 6% margin is one that Nvidia has managed to beat in each of the past four quarters.

ETF Impact

How shares of Nvidia react to the company’s earnings report may have a major impact on the many ETFs that hold them.

Perhaps no fund is as sensitive to the company's performance as the GraniteShares 1.5x Long NVDA Daily ETF (NVDL), which aims to give investors one-and-a-half times the return as Nvidia's publicly-traded shares. That fund has jumped more than five-fold over the past year as Nvidia tripled in price.

Semiconductor exchange-traded funds in particular, like the VanEck Semiconductor ETF (SMH) and the iShares Semiconductor ETF (SOXX)—which hold 21% and 9% of their portfolios, respectively, in the stock, will be greatly affected.  

Artificial intelligence ETFs, such as the Roundhill Generative AI & Technology ETF (CHAT), which holds an 11% position in the stock, will also feel the stock’s gyrations.

Even broad market investors may not be able to escape the pull of Nvidia’s stock on Thursday, the day following the earnings release.  

Nvidia currently has a 5.1% weighting in the SPDR S&P 500 ETF Trust (SPY), making it the third-largest holding for the ETF.