The growing narrative of artificial intelligence should continue as 2023 turns into 2024. One of the ongoing names to watch is chipmaker Nvidia, which should propel ETFs with exposure to the stock. The buzz around Nvidia is warranted given its stock is up over 200% for the year. As the world starts to rely more heavily on AI and it extends its reach beyond businesses and into the hands of consumers, the growth potential of this disruptive technology is seemingly limitless.
“NVIDIA is going to continue to drive this generative AI wave,” said Bob O’Donnell, TECHnalysis Research president and chief analyst. He noted the company’s development of CUDA. That is a software platform that allows developers to speed up computing applications via the power of graphics processing units.
“CUDA also makes it easy for developers to take advantage of all the latest GPU architecture innovations — as found in our most recent NVIDIA Ampere GPU architecture,” Nvidia noted in a blog.
The capabilities of AI will be reliant on chips that can power the technology. This is where Nvidia has a competitive advantage in the marketplace, which should only open up the field for more competition as AI continues its upward growth trajectory.
Actively Focused Growth
Nvidia is one of the top holdings, as of November 30, in the the American Century Focused Dynamic Growth ETF (FDG). It comprises about 8% of the fund’s allocation, while offering exposure to other names with a focused growth tilt, leveraging the momentum of companies that are experiencing exponential growth.
FDG is actively managed, and that active management component means that the fund stays pliable given current market conditions. That allows portfolio managers the ability to add or reduce holdings as necessary to capture more upside or protect the downside.
Actively managed FDG invests in companies in their early and rapid growth stages. The fund’s managers look for companies with a competitive advantage, profitability, and scalability that other managers may overlook.
The focused approach also applies to the number of holdings in FDG. Given its discernible filter, investors won’t see hundreds of companies in its portfolio. Instead, the fund has 37 holdings. Its top 10 holdings comprise about 55% of the fund. The top three exposure tilts toward the information technology, consumer discretionary and healthcare sectors. Currently, Amazon is its top holding, which is another name associated with AI growth.
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