Nvidia Stock, Related ETFs Jump on AI Partnership

Nvidia Corp. stock surged, boosting a host of exchange-traded funds Wednesday and today, after the tech giant juggernaut unveiled new cloud services aimed at helping companies develop their own unique “large language” models and generative artificial intelligence models.

The Nvidia AI Foundation will provide services related to images, video and 3D, according to a press statement. The company also said that Getty Images, Morningstar, Quantiphi and Shutterstock are on board to use the services. The announcement also notes that Nvidia and Adobe Inc. will deepen their existing R&D relationship to include the development of next-generation AI models.

The stock has gained more than 4% since the morning after the March 21 announcement following the close of trading, according to Yahoo Finance.

“Generative AI is driving the fast adoption of AI and reinventing countless industries,” NvidiaCEO Jensen Huang said in the statement

The largest semiconductor ETF, the $7.7 billion VanEck Semiconductor ETF (SMH) is up 2.4% since Wednesday. NVDA is the fund’s largest holding, with a weighting of more than 13%. The $7.4 billion iShares Semiconductor ETF (SOXX) was up 2.2%; NVDA is also its largest holding but has a lower weighting than it does in SMH, at about 8.6%.

Two ETFs offer leveraged and inverse exposure to the performance of NVDA’s stock. The GraniteShares 1.5x Long NVDA Daily ETF (NVDL), which has less than $6 million in assets, was up 7.3% over the same time period. At the same time, the AXS 1.25X NVDA Bear Daily ETF (NVDS), a nearly $88 million fund, was down 4.9%. Clearly, more market participants were betting on a decline in NVDA stock than were expecting upside performance.

Artificial intelligence has been in the spotlight since OpenAI launched its chatbot ChatGPT in prototype form in late 2022. The technology became a subject of both controversy and acclaim, and sent competitors working on their own AI chatbots into a scramble to keep up. Companies like Google, Meta and Baidu have either begun testing or launched their own AI-related technologies in the intervening months.

A host of AI and robotics ETFs are seeking to capitalize on the interest in the technology, including the iShares Robotics and Artificial Intelligence Multisector ETF (IRBO).

Contact Heather Bell at [email protected]