Semiconductor ETFs Climb After Nvidia's Record Q3 Revenue

Semiconductor sector-related exchange traded funds rallied Thursday after Nvidia (NasdaqGS: NVDA) posted record revenue on surging videogame sales.

On Thursday, the iShares PHLX Semiconductor ETF (NasdaqGS: SOXX) advanced 1.7%, the VanEck Vectors Semiconductor ETF (SMH) increased 2.5%, and the Invesco PHLX Semiconductor ETF (SOXQ) rose 1.8%.

Meanwhile, Nvidia shares were 8.3% higher. NVDA makes up 10.3% of SMH’s underlying portfolio, 9.4% of SOXQ, and 9.3% of SOXX.

Nvidia has enjoyed strong sales in the post-pandemic world as consumer appetite for videogames, and the broader adoption of digital devices that run on data centers helped support demand for Nvidia’s chips, the Wall Street Journal reports.

The chipmaker stated that sales for its third quarter rose 50% to $7.1 billion, with a net income of $2.46 billion, which beat Wall Street expectations that the company would bring in $6.8 billion in revenue and $2.27 billion in net income. The company’s Q3 revenue was supported by record video gaming sales of $3.2 billion, or up 42% year-over-year, along with record data-center sales, up 55% compared to the same period last year.

While the world continues to suffer a semiconductor shortage that has weighed on sales of various products like gaming consoles and cars, buyers continue to hoard chips. Intel Corp. Chief Executive Pat Gelsinger predicted that the shortage could last into 2023.

“We feel very good about our supply situation, particularly starting in the second half of next year and going forward,” Chief Executive Jensen Huang said on an analysts call, noting that the company has taken steps to ensure long-term supply agreements with $1.64 billion in advanced orders for the third quarter.

Looking ahead, Huang anticipates growth opportunities for the so-called metaverse, a loosely defined group of online realms where users adopt avatars to hang out and participate in immersive experiences. Huang argued that the metaverse economy has the potential to be bigger than the current one.

“This is really going to be one of the largest graphics opportunities that we’ve ever seen,” he added.

For more information on the tech sector, visit our technology category.