AI ETFs Respond to Nvidia GTC, Fed Rate Decision

Nvidia CEO Huang announced new GPU to feature “transformative technologies.”

While many investors focused on this week’s Fed rate decision, Nvidia’s GTC conference revealed some surprises. 

Nvidia, Inc. (NVDA), the Santa Clara, CA-based semi-conductor company and leading designer of graphics processing units (GPUs), is hosting this week’s GTC (GPU Technology Conference), a semi-annual event focused on artificial intelligence (AI). 

The conference primarily targets developers, researchers, engineers, inventors and IT professionals in various fields related to AI, accelerated computing, data science and machine learning. 

In front of a rock concert-like crowd at the San Jose Convention Center in California, Nvidia founder and CEO Jensen Huang delivered a keynote speech that included a surprising announcement about new generative AI technology, the Blackwell GPU, which features “transformative technologies for accelerated computing,” at up to 25 times less cost, according to an Nvidia report. 

“Generative AI is the defining technology of our time. Blackwell is the engine to power this new industrial revolution. Working with the most dynamic companies in the world, we will realize the promise of AI for every industry,” said Huang. 

Semiconductor and AI ETFs Respond to GTC, Fed

ETFs holding Nvidia stock had a muted response to the GTC with a 1% gain over the past five trading days, but are up as much as 25% year-to-date, as measured by the VanEck Semiconductor ETF (SMH). 

Meanwhile, the Federal Reserve held its key interest rate at 5.25%-5.50% on Wednesday for the fifth straight meeting, matching investor expectations. The news helped to support the economic soft-landing narrative, which is generally positive for interest-rate sensitive tech stocks. 

Similar to semiconductor ETFs, artificial intelligence ETFs were up on the Fed’s rate decision, as measured by the more than 1% gain from the largest AI ETF, the Global X Robotics & Artificial Intelligence ETF (BOTZ), which is up 13% year-to-date. 

Going forward, the outlook for semiconductor stocks and AI ETFs remains uncertain as a slowing economy can lead to investor risk aversion, potentially affecting the performance of AI ETFs.