Nvidia (NVDA 1.53%) delivered another blockbuster earnings report on Wednesday, topping estimates on the top and bottom lines and posting red-hot growth rates.
Revenue jumped 73% to $68.1 billion, ahead of the consensus at $66.2 billion. Gross margin improved from 73.4% to 75%, and adjusted net income rose 79% to $39.5 billion, or $1.62 a share, beating expectations at $1.54.
No company in history has ever grown this fast with this much profit. The numbers speak for themselves as a testament to Nvidia's dominance and the AI boom. Its profit margin reached 58%, and its growth rate accelerated for the second quarter in a row, showing insatiable demand for its chips and AI computing power.
However, investors mostly shrugged off the results. While the stock was up more than 3% after hours, the gains faded during the earnings call, and it finished the after-hours session essentially flat.
Nvidia is clearly a known entity by now, and every investor recognizes it as the leading AI stock. That reputation makes it more difficult for the stock to move higher here, as even blowout growth numbers aren't really a surprise from Nvidia, and at a market cap near $5 trillion, it won't be easy for the stock to surge again.
While Nvidia still looks like a great stock to own, there is an ETF that looks like a great way to capitalize on the AI boom. That's the VanEck Semiconductor ETF (SMH 3.22%), which offers a way to diversify your holdings across the top AI stocks and get exposure to the AI boom, which seems to be picking up steam, according to Nvidia's latest results, though the winners are still uncertain.
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Why the VanEck Semiconductor ETF looks like a smart buy
The VanEck Semiconductor ETF tracks many of the biggest semiconductor stocks in the world, and it's been one of the top-performing ETFs since its inception in 2011.
Its top five holdings include Nvidia, Taiwan Semiconductor (TSM 4.96%), Broadcom (AVGO 1.63%), Micron (MU 3.21%), and ASML (ASML 2.61%), which together make up roughly 50% of the fund.
All five of those companies hold leading positions in their respective semiconductor subsectors, offering investors diverse exposure to the AI boom.
Nvidia is the leader in data center GPUs. Taiwan Semi is the leading semiconductor manufacturer. Broadcom dominates the networking chip market. Micron is a leader in memory chips, and ASML is the only maker of extreme ultraviolet lithography (EUV) equipment, which is used to make the most advanced chips.
Though Nvidia is the biggest holding in the SMH ETF, it has an advantage over just owning Nvidia because it's difficult to predict who the next winner in the AI boom will be. Micron, for example, has more than tripled over the last six months due to the memory chip shortage, and ASML has been on fire as well, doubling during that period.
Nvidia's success is likely to benefit all of the top holdings, with the possible exception of Broadcom, but other chip stocks have more upside potential than Nvidia, as they trade at market caps significantly lower than Nvidia at nearly $5 trillion.
NASDAQ: SMH
Key Data Points
The AI boom is heating up
Nvidia's results show that any talk of an AI bubble is grossly premature or just pure fiction, as the boom is alive in well.
That's good news for Nvidia and its chip stock peers. The SMH ETF isn't cheap at a price-to-earnings ratio of 45, but it gives you exposure to a wide range of AI stocks and the best chance of owning the next stock that will double in the next six months. With AI spending still soaring, the ETF should be a winner.
