To The Moon

Nvidia, the AI chip leader and hailed as "the most important stock on Earth" by Goldman Sachs, once again announced unmatched performance that left global investors in awe.

After Wednesday's U.S. stock market close, Nvidia ($NVDA.US), the dominant force in AI chips and bestowed with the title of "the most important stock on Earth" by Goldman Sachs, unveiled another set of extraordinary financial results, dispelling concerns about slowing spending by AI-related companies. Nvidia single-handedly reinforced the "AI faith" among tech investors. The faith in AI is once again making waves in the global stock market, particularly driving the surge of chip stocks like TSMC, AMD, Samsung Electronics, and SK Hynix.

Additionally, Nvidia made a significant announcement of a 10-for-1 stock split and a substantial increase in dividend payouts, further boosting its stock price. Nvidia stated in its financial report that these measures aim to make it easier for employees and investors to buy shares. This will be Nvidia's second stock split in the past three years, with the company's stock price soaring by an astonishing 500% since the announcement of the last stock split in May 2021.

Of course, stock splits do not fundamentally affect the value of the stock itself. However, after implementing a stock split plan, the price of the underlying stock significantly decreases, meaning that stocks with excellent fundamentals can attract more investors to participate in trading. Previously, these investors often hesitated due to the high stock price.

Nvidia's performance has been "exploding" for several consecutive quarters! Huang Renxun exclaimed: "The next industrial revolution has begun."

Overall, Nvidia's latest performance far exceeds market expectations, with both total revenue and data center business revenue reaching record highs. The revenue outlook for the next fiscal quarter also far exceeds market expectations, while announcing a stock split and a significant increase in dividend payouts.

Nvidia's Q1 total revenue increased by 262% year-on-year to $26 billion, far exceeding the market's general expectation of $24.5 billion. Total revenue reached a historic high, with the year-on-year growth rate of total revenue exceeding 200% for the third consecutive quarter. In terms of performance expectations, Nvidia expects revenue for the second quarter to reach around $28 billion, far exceeding the market's expected $26.8 billion.

Huang Renxun, founder and CEO of Nvidia, emphasized during the performance conference call: "The next industrial revolution has begun." "Artificial intelligence (AI) will significantly improve productivity in almost every industry, help companies improve cost and energy efficiency, and expand opportunities for universal income."

Huang Renxun also stated during the conference that Nvidia hopes to sell its AI technology to a wider market, not just large cloud computing providers. Huang Renxun stated that AI is shifting to a broader range of customers, including consumer internet companies, automotive manufacturers, and healthcare, and governments around the world are actively developing their own AI systems. He said that in addition to cloud service providers, these opportunities are creating "multiple multi-billion dollar vertical markets."

The AI ​​wave is sweeping in, and the chip industry is entering a new era of prosperity.

Nomura, one of the world's top financial institutions, recently released a report stating that as the cyclical technology recovery expands to other consumer electronics terminal markets, it will support the entire chip industry to enter the next round of prosperity, which is expected to continue from the second half of this year to 2025. Nomura predicts that global chip sales will show a strong growth trend in the coming months, and with the demand for AI chips driving it, the cyclical recovery of the terminal chip market will expand from AI servers to traditional servers, PCs, as well as core CPU chips for smartphones and other major computing areas such as electric vehicle MCUs.

The trend of chip industry recovery led by AI chips is becoming increasingly clear. Data recently released by the Semiconductor Industry Association (SIA) of the United States shows that the total global semiconductor sales in the first quarter of 2024 reached $137.7 billion, an impressive increase of 15.2% compared to the first quarter of 2023. Regarding the expected sales of the semiconductor industry in 2024, John Neuffer, President and CEO of SIA, predicted in the data report that the overall sales in 2024 will achieve a double-digit increase compared to 2023.

AI and chip ETFs are poised for action.

The reaction of Nvidia's stock price to the company's earnings report may have a significant impact on many ETFs holding the stock.

Perhaps no fund is as sensitive to company performance as the GraniteShares 2x Long NVDA Daily ETF (NVDL), which aims to deliver returns equivalent to twice the performance of Nvidia's publicly traded stock. With Nvidia's stock price up 109% year-to-date, the fund has risen 243% year-to-date.

Semiconductor exchange-traded funds, such as the VanEck Semiconductor ETF (SMH) and the iShares Semiconductor ETF (SOXX), each have 21% and 9% of their portfolios invested in the stock, respectively, and have risen 37% and 22% year-to-date.

AI ETFs, such as the Roundhill Generative AI & Technology ETF (CHAT), which holds 11% of the stock, have risen 15% year-to-date.

Even broad market investors may not be able to resist the allure of Nvidia's stock. Currently, Nvidia's stake in the SPDR S&P 500 ETF Trust (SPY) is 5.1%, making it the third-largest holding in the ETF, which has risen 11% year-to-date.