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Nvidia ETFs in Focus Ahead of Q3 Earnings

Sweta Killa
·5 min read

Graphics chipmaker Nvidia NVDA is set to release third-quarter fiscal 2023 results on Nov 16, after market close. Caught in the tech sector selling spree — triggered by rate hike concerns — Nvidia has plunged 14.4% over the past three months.

The stock is underperforming the industry’s average loss of 11.1%. This trend might reverse if the chipmaker comes up with an earnings beat in its Q3 report.

Given this, ETFs having the largest allocation to Nvidia could make compelling plays ahead of its earnings report. These include Roundhill Ball Metaverse ETF METV, Pacer Data and Digital Revolution ETF TRFK, VanEck Vectors Semiconductor ETF SMH, VanEck Vectors Video Gaming and eSports ETF ESPO and The Spear Alpha ETF SPRX.

Earnings Whispers

Nvidia currently has a Zacks Rank #3 (Hold) and an Earnings ESP of 0.00%. According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

This videogame-gear specialist saw no earnings estimate revision over the past 30 days for the third quarter of fiscal 2023. Nvidia’s earnings surprise history is solid. It delivered an earnings surprise of 2.33%, on average, in the last four quarters. However, NVDA is expected to post robust earnings and revenue decline of 39.3% and 16.2%, respectively, for the to-be-reported quarter (read: Bet on These Equity ETFs to Follow Warren Buffett).

The Zacks Consensus Estimate for the average target price is $202.72, with nearly 70% of the analysts giving a Strong Buy or a Buy rating ahead of NVDA earnings.

What to Watch?

The graphics chipmaker provided a revenue guidance of $5.90 billion (+/-2%) for the third quarter of fiscal 2023. This is well below the Zacks Consensus Estimate of $7.02 billion. Nvidia cited weakening demand for its gaming processors by its channel partners and resellers, noting that the lower sales were likely the result of "macroeconomic headwinds." A slump in cryptocurrencies will add to the weakness.

ETFs in Focus

Let’s delve into each ETF below:

Roundhill Ball Metaverse ETF (METV)

Roundhill Ball Metaverse ETF is designed to offer investors exposure to the Metaverse by tracking the Ball Metaverse Index. It holds 45 stocks in the basket, with Nvidia occupying the top position at 10.4%. Roundhill Ball Metaverse ETF has key holdings in gaming platforms, cloud solutions, computing components, and social networks.

Roundhill Ball Metaverse ETF debuted in the space in June last year and has accumulated $403.6 million in its asset base. METV charges 59 bps in fees per year and trades in an average daily volume of 306,000 shares.

Pacer Data and Digital Revolution ETF (TRFK)

Pacer Data and Digital Revolution ETF aims to offer investors exposure to the globally listed stocks and depositary receipts of data and digital revolution companies. It follows the Pacer Data Transmission and Communication Revolution Index, holding 83 stocks in its basket. Out of these, Nvidia is the top firm, accounting for a 10% share. Semiconductors take the largest share at 29.1%, while system software and communication equipment round off the next two spots.

Pacer Data and Digital Revolution ETF newly debuted in the space in June, and has accumulated $0.9 million in its asset base and has an expense ratio of 0.60%. It trades in a meager volume of under 500 shares per day on average.

VanEck Vectors Semiconductor ETF (SMH)

VanEck Vectors Semiconductor ETF offers exposure to the companies involved in semiconductor production and equipment. SMH follows the MVIS US Listed Semiconductor 25 Index, which tracks the most-liquid companies in the industry based on market capitalization and trading volume. VanEck Vectors Semiconductor ETF holds 25 stocks in its basket, with Nvidia occupying the second position at 9.1% (read: 5 Tech ETFs At the Heart of Last Week's Rally).  

VanEck Vectors Semiconductor ETF has managed assets worth $6.9 billion and charges 35 bps in annual fees and expenses. SMH is heavily traded with a volume of 5 million shares per day and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.

VanEck Vectors Video Gaming and eSports ETF (ESPO)

VanEck Video Gaming and eSports ETF 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. ESPO holds 25 stocks, with NVIDIA taking the top spot with an 8.9% share. VanEck Video Gaming and eSports ETF is inclined toward American firms, which account for 42% of the portfolio, while Japan and China round off the next two with double-digit allocations each.

VanEck Video Gaming and eSports ETF has gathered $258.1 million in its asset base while trading in an average daily volume of 35,000 shares. ESPO charges 55 bps in annual fees from investors.

The Spear Alpha ETF (SPRX)

The Spear Alpha ETF is an actively managed fund that invests in companies poised to benefit from breakthrough trends in industrial technology. The ETF’s objective is to find underappreciated opportunities across different industrial supply chains that are beneficiaries of secular themes such as environmental focus and decarbonization, manufacturing digitalization, automation & robotics, photonics and additive manufacturing, space exploration, and artificial intelligence. The Spear Alpha ETF holds 20 stocks in its basket, with Nvidia taking the third spot at 8.7% share (read: Tech ETF Winners Amid Big Tech's Acute Slump Last Week).

The Spear Alpha ETF has accumulated $2.9 million in its asset base since  its inception in August and charges 75 bps in annual fees. It trades in an average daily volume of 1,000 shares.


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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
 
VanEck Semiconductor ETF (SMH): ETF Research Reports
 
VanEck Video Gaming and eSports ETF (ESPO): ETF Research Reports
 
Spear Alpha ETF (SPRX): ETF Research Reports
 
Roundhill Ball Metaverse ETF (METV): ETF Research Reports
 
Pacer Data and Digital Revolution ETF (TRFK): ETF Research Reports
 
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