Nvidia (NASDAQ:NVDA) has solidified its position as a dominant force within various tech-focused exchange-traded funds (ETFs) during its impressive rise. While NVDA stock may have relinquished its title as the world’s largest company in a recent correction, leading to a market cap of $3 trillion, underestimating its potential for future growth due to its enormous size would be a misstep.
Size alone doesn’t hinder growth, especially for industry leaders like Nvidia that have surged ahead in the realm of artificial intelligence (AI). In the era of AI where data reigns supreme, the size of a company could propel its growth further. The S&P 500 is already top-heavy, and with the ongoing AI boom, it could become even more top-heavy.
Anticipate intense volatility for NVDA stock. For investors seeking to mitigate this volatility, investing in an ETF exposed to Nvidia might be a wise consideration. Let’s delve into three ETFs with substantial NVDA holdings.
Technology Select Sector SPDR Fund (XLK)
Source: shutterstock.com/bangoland
Technology Select Sector SPDR Fund (NYSEARCA:XLK) emerges as an intriguing tech ETF post a significant rebalancing of its top holdings. While ETF rebalancing is often not a major event, XLK is more top-heavy than the Nasdaq 100, with a strong focus on its top two holdings. Microsoft (NASDAQ:MSFT) and Nvidia each contribute over 20% of XLK’s holdings. This heavy concentration, with more than 40% invested in just two stocks, sets XLK apart.
Increasing Nvidia exposure at the expense of Apple (NASDAQ:AAPL) in XLK could be a strategic move, aligning with investors’ desire for more shares of Nvidia alongside a substantial serving of Microsoft stock within XLK.
VanEck Robotics ETF (IBOT)
Source: shutterstock.com/sdecoret
The VanEck Robotics ETF (NASDAQ:IBOT) is another compelling Nvidia-heavy ETF, offering moderate exposure to NVDA stock. Investors can also access semiconductor equipment manufacturers poised to benefit from automation in robotics. This ETF includes lesser-known international players seeking to harness the potential of AI and automation, offering a diversified approach beyond Nvidia’s realm.
IBOT stands out as a well-rounded option for investors intrigued by robotics firms, providing greater diversification compared to XLK and minimizing concentration risks in pursuit of substantial returns.
VanEck Semiconductor ETF (SMH)
Exploring the Booming Semiconductor Market Through VanEck Semiconductor ETF
The Rise of VanEck Semiconductor ETF
VanEck Semiconductor ETF (NASDAQ:SMH) has emerged as a popular ETF providing investors with a quick pulse on the health of the broader semiconductor market. The shares of SMH have been on fire, soaring over 53% year-to-date (YTD).
Market Volatility and Resilience
Similar to the fluctuations seen in NVDA stock, SMH has experienced some turbulence this month, retreating approximately 6.5% from its all-time highs. However, this minor setback is unlikely to cause concern, as the semiconductor sector appears poised for continued growth in the coming years.
Diversified Holdings and Dominant Players
Despite having exposure to 26 different holdings, SMH, like XLK, showcases a considerable emphasis on Nvidia, representing over 20% of the ETF. Notably, Nvidia is the sole entity within the ETF that surpasses the 20% mark. The second position is occupied by Taiwan Semiconductor (NYSE:TSM) with a weight of 12.9%.
Investment Insights and Opportunities
Both SMH and XLK present compelling investment opportunities for those seeking exposure to Nvidia and its industry counterparts through a passive investment strategy. Depending on one’s tech investment strategy, both ETFs offer attractive avenues for participation in this thriving sector.