Nvidia’s (NVDA) fiscal Q2 earnings, one of August’s marquee events, are now in the rearview mirror. But simply because summer is fading doesn’t mean interest in Nvidia market capitalization will.
In all likelihood, the semiconductor behemoth will remain top-of-mind for investors, the result of the stock commanding outsized percentages of many widely followed indexes. Alone, Nvidia’s prominence can invite opportunity with geared ETFs such as the Direxion Daily NVDA Bull 2X Shares (NVDU). But there are other reasons risk-tolerant traders may want to evaluate NVDU.
NVDU attempts to deliver 200% of the daily performance of Nvidia shares. As a leveraged ETF, NVDU is best deployed over short time frames, meaning catalysts are essential, and those sparks could materialize. For example, some market observers see Nvidia finding its way to $200. Wedbush analyst Dan Ives believes it’s just a matter of time before the company’s market value hits $5 trillion. On August. 28, Nvidia closed at $180.17 with a market cap of $4.43 trillion.
Nvidia Has the Goods to Boost NVDU
Initial reaction to Nvidia’s earnings report was downbeat. But the stock closed Thursday with just a modest loss. That indicates investors are at peace with some impressive fundamentals. And those factors could propel NVDU over the near term.
“Other metrics looked solid, though perhaps not as eye-popping as in the past thanks in part to the law of large numbers. Guidance of $54 billion in revenue for the current quarter represents more than 50% year-over-year growth, and the company authorized $60 billion in new share repurchases,” according to Charles Schwab research.
While Nvidia’s post-earnings price action wasn’t anything to brag about, the company’s guidance was enough to elicit a round of price target hikes among analysts. That pushed the average price target on the stock to nearly $202. That’s about 12% above where the stock closed on August 28. With each step Nvidia takes toward that objective, NVDU could respond in positive fashion.
Nvidia and thus NVDU could also benefit from clarity on the geopolitical front. President Trump doesn’t want Nvidia and other domestic semiconductor companies selling their highest-level chips in China. He is also likely cognizant of Nvidia’s impact on the U.S. equity market and retirement plans.
Nvidia CEO Jensen Wang acknowledged it could take time for the China talks with the White House to bear fruit. But his tone appeared cautiously optimistic. Wang noted Trump is committed to seeing the U.S. maintain and expand its artificial intelligence leadership.
For more news and information, visit the Leveraged & Inverse Content Hub.
