Key Takeaways
- Nvidia shares jumped after the chipmaker reporting better-than-expected earnings.
- The move helped boost the Nasdaq 100, as Nvidia has a weighting of around 6.5% on the index.
- Semiconductor ETFs, like the VanEck Semiconductor ETF and the iShares Semiconductor ETF gained as well, due to the funds’ heavy exposure to Nvidia.
- Stocks of companies with ties to Nvidia also rose, including Dell Technologies.
- Other semiconductor stocks rose in sympathy with the leading AI chip company.
After reporting better-than-expected earnings and meeting the increasingly high bar set for investors’ artificial intelligence (AI) darling, Nvidia (NVDA) shares popped, pulling up the Nasdaq 100, exposed semiconductor exchange-traded funds (ETFs), and other companies in its AI ecosystem. Shares of Nvidia were up over 10% at $1,044.88 in early trading Thursday as of 10:30 a.m. ET.
Nasdaq 100 Rises, Propped Up By Chipmaker’s Pop
The Nasdaq 100 rose roughly 0.5% in early trading Thursday, following Nvidia’s earnings-fueled jump. The chipmaker has a weighting of around 6.5% of the Nasdaq 100, the third-heaviest company after Microsoft (MSFT) at 8.6% and Apple (AAPL) at 8%, reflected in the holdings of the Invesco QQQ ETF (QQQ), an ETF mirroring the index.
The index is constructed with a modified capitalization method, which uses weights of constituent companies based on their market capitalization. After its earnings-fueled gains, Nvidia’s market cap jumped to over $2.5 trillion from $2.3 trillion the day prior. If maintained, Nvidia’s higher market cap could change the stock’s weighting on the index during the quarterly composition rebalancing.
The S&P 500 was 0.1% higher, with Nvidia making up around 5.5% of the index.
Semiconductor ETFs Jump
Nvidia’s influence on semiconductor industry ETFs as well as AI-focused ETFs meant that the chipmaker’s jump pulled up exposed ETFs as well.
The VanEck Semiconductor ETF (SMH) was up nearly 3% while the iShares Semiconductor ETF (SOXX) gained close to 2%.
Nvidia makes up more than 20% of the VanEck Semiconductor ETF, making it the heaviest-weighted company in the ETF, followed by Taiwan Semiconductor Manufacturing Company (TSM) at nearly 13%. The chipmaker has a 9% weight on the iShares Semiconductor ETF, followed by Broadcom (AVGO) at 8% and Qualcomm (QCOM) at less than 7.5%.
Nvidia’s AI Ecosystem Shares in Gains
As Nvidia shares gained, stocks of companies with ties to the chipmaker followed suit, including some of Nvidia’s partners and customers, as well as other semiconductor makers.
Dell Technologies (DELL) shares were up nearly 7% after Nvidia CEO Jensen Huang called out the company on the chipmaker’s earnings call when highlighting Nvidia’s “rich ecosystem of partners.” Dell recently announced an expansion to its AI factory with Nvidia products.
Other semiconductor industry stocks gained in sympathy with Nvidia as good news for the leading AI chipmaker is often good news for others in the sector. Micron Technology (MU), which produces memory chips used in Nvidia GPUs, was up 2.5%, while Marvell Technology (MRVL) gained 1.7%.