⌛ Did you miss ProPicks’ 13% gains in May? Subscribe now & catch June’s top AI-picked stocks early.Unlock Stocks

Nvidia Stock: 4 Ways to Supercharge Your Gains While Hedging Against Risk

Published 2024-04-09, 07:15 a/m
NVDA
-
MSTR
-
SMCI
-
SOX
-
SMH
-
HNSC
-
SEMI
-
  • Nvidia stock is always at the center of attention for the media and investors.
  • However, there's concern that its current trading prices might exceed its actual value, making many hesitant to buy at current levels.
  • Let's explore a straightforward method to invest in Nvidia while also reducing the risk in case it drops.
  • Investing in the stock market and want to get the most out of your portfolio? try InvestingPro. Sign up NOW and take advantage of up to 38% off for a limited time on your 1-year plan!
  • Nvidia (NASDAQ:NVDA) is a top pick among investors and it's obvious — just look at its market cap, which is now worth more than the entire German stock market.

    Strong demand for the stock is evident from its remarkable surge of +223% over the past 12 months, highlighting its popularity with investors.

    But let's not oversimplify by attributing everything to its impressive performance alone.

    Nvidia's YTD rise of +76% is notable, yet two other stocks are outpacing it by a wide margin: Super Micro Computer (NASDAQ:SMCI) with a staggering +227% return and MicroStrategy (NASDAQ:MSTR) with gains of +140%.

    Below is a comparison chart of the three stocks' performance in 2024, with Nvidia represented by the red line.

    Nvidia Vs. MicroStrategy Vs. Super Micro

    Nvidia reports results on May 22. The following chart shows actual revenue forecasts for the remaining three quarters of 2024 (up 9.7%, 9% and 8.7% respectively).

    Nvidia Forecasts

    Source: InvestingPro

    As for EPS (earnings per share) for the next three quarters, the forecasts are for an increase of 6.7%, 6.9% and 8.6% respectively.

    Nvidia Forecasts

    Source: InvestingPro

    The market consensus gives it potential at $971.46 from $871.33 at the close of the last trading session. In contrast, InvestingPro models estimate that it trades above its target value of $784.

    Nvidia Fair Value

    Source: InvestingPro

    Just a few days ago, Saxo Bank cautioned that the hype surrounding artificial intelligence, evident in the soaring stock prices of companies like Nvidia and Novo Nordisk (NYSE:NVO), may be overstated due to inflated company valuations.

    While some investors are hesitant to buy Nvidia shares at these high prices, they still want to capitalize on any potential gains. At first glance, it might seem challenging to profit from Nvidia's stock surge without actually buying its shares.

    However, there is a solution.

    Instead of investing directly in Nvidia, there are ETFs available that offer significant exposure to Nvidia along with other semiconductor stocks. This approach allows for a diversified portfolio and minimized risk. Let's explore some of these ETF options:

    1. VanEck Semiconductor

    The VanEck Semiconductor ETF (NASDAQ:SMH) consists of semiconductor companies from various parts of the world that are listed in the United States.

    The ETF charges a fee of 0.35%. Any dividends earned by the ETF are reinvested.

    This ETF is quite large, managing $1.669 billion in assets. It was established on December 1, 2020, and is based in Ireland.

    Over the past 3 years, it has yielded 85.45%, while its 1-year yield stands at 69.64%. Some of its top holdings include:

    • Nvidia (it has the largest weighting, 11.39%).
    • Broadcom (NASDAQ:AVGO)
    • ASML Holding NV (AS:ASML) ADR (NASDAQ:ASML)
    • Taiwan Semiconductor Manufacturing (NYSE:TSM)
    • AMD (NASDAQ:AMD)
    • Intel (NASDAQ:INTC)
    • Qualcomm Incorporated (NASDAQ:QCOM)
    • Texas Instruments (NASDAQ:TXN)
    • Applied Materials (NASDAQ:AMAT)
    • Lam Research (NASDAQ:LRCX)

    2. iShares Semiconductor

    The iShares Semiconductor ETF (NASDAQ:SOXX) has a decent level of diversification is present in this product as it holds close to 125 securities in total.

    Its expense ratio is 0.35%, and the fund manages about $1.2B in assets. The YTD returns are 15%.

    The top holdings include:

    • Nvidia with 8.72%.
    • Broadcom Inc. with 8.07%.
    • Advanced Micro Devices, Inc. with 6.94%.
    • QUALCOMM Incorporated with 6.65%.
    • Intel Corporation with 5.50%.
    • Micron Technology (NASDAQ:MU), Inc. with 5.35%.
    • Microchip Technology Incorporated (NASDAQ:MCHP) with 4.08%.

    3. iShares MSCI Global Semiconductors ETF

    The iShares MSCI Global Semiconductors UCITS ETF USD Acc (LON:SEMI) consists of semiconductor companies from 23 developed and 24 emerging markets.

    The annual fee is 0.35% and dividends are accrued and reinvested in the ETF.

    It manages 1.05 billion, was born on August 3, 2021, and is based in Ireland.

    The 1-year yield is 57.57%. The main stocks with the highest weight are:

    • Broadcom
    • ASML
    • Nvidia (its weight is 8.07%)
    • AMD
    • TSM
    • QUALCOMM
    • Texas Instruments
    • Applied Materials
    • Intel
    • Lam Research

    4. HSBC Nasdaq Global Semiconductor (HNSC)

    The HSBC NASDAQ Global Semiconductor UCITS ETF USD (LON:HNSC) replicates the Nasdaq Global Semiconductor index which is comprised of companies from around the world operating in the semiconductor industry.

    The annual fee is 0.35% and dividends are accrued and reinvested in the ETF.

    It is a small ETF created on January 25, 2022, and is domiciled in Ireland.

    Its 1-year yield is 62.51%. The stocks with the highest weight are:

    • Nvidia: its weight is 9.21%.
    • ASML
    • Broadcom
    • AMD
    • TSM
    • QUALCOMM
    • Applied Materials
    • Texas Instruments
    • Intel
    • Lam Research

    The European Union and the United States have agreed to extend their cooperation agreements for three years.

    These agreements aim to identify issues within chip supply chains and closely monitor China's dominance in less advanced chips found in everyday products.

    It is estimated that around 60% of new chips entering the market in the coming years will be produced in China.

    ------

    Are you investing in the stock market? To determine when and how to get in or out, try InvestingPro.

    Take advantage HERE & NOW! Click HERE, choose the plan you want for 1 or 2 years, and take advantage of your DISCOUNTS.

    Get from 10% to 50% by applying the code INVESTINGPRO1. Don't wait any longer!

    With it, you will get:

    • ProPicks: AI-managed portfolios of stocks with proven performance.
    • ProTips: digestible information to simplify a large amount of complex financial data into a few words.
    • Advanced Stock Finder: Search for the best stocks based on your expectations, taking into account hundreds of financial metrics.
    • Historical financial data for thousands of stocks: So that fundamental analysis professionals can delve into all the details themselves.
    • And many other services, not to mention those we plan to add in the near future.

    Act fast and join the investment revolution - get your OFFER HERE!

    Subscribe Today!

    Disclaimer: The author does not own any of these shares. This content, which is prepared for purely educational purposes, cannot be considered as investment advice.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.