Will NVIDIA Push This Leveraged AI ETF Even Higher In H2?

Graphics processing unit (GPU) company NVIDIA (NVDA) is the top constituent in the index underpinning the Direxion Daily Robotics, Artificial Intelligence & Automation Index Bull 2X ETF (UBOT). Thanks to NVIDIA stock, the ETF is now up over 50% YTD — and it could keep climbing, as investor interest in AI continues to heat up.

UBOT YTD performance 2023

UBOT has risen 50% year-to-date, according to LOGICLY data.

AI has been one of 2023’s hottest investment themes, with Big Tech exerting dominance in the current stock market rally. In order to power new AI technologies, companies will need GPUs capable of meeting the beefy computing power demands. Hence, high-end GPU makers, like NVIDIA, stand to benefit most.

Supermicro’s Stock Also Benefits From NVIDIA Rise

Another company poised to benefit is Supermicro (SMCI), which makes server-based solutions that power AI applications. In order to do this, it will also require NVIDIA’s GPUs. It just underscores how Big Tech companies will leverage each other’s products and services to enable exponential growth in development and use of AI over time.

“Supermicro continues to see record levels of engagements in our new generation product lines, especially for AI applications,” said Chief Executive Charles Liang in a recent interview.

“We secured several new and large design wins and are deploying some of the world’s most leading GPU clusters. With the recent new key components supply chain challenges mostly in the rearview mirror and production normalizing, we expect to gain share and expand scale,” Liang added.

UBOT: Double Up Exposure to AI

With so much heightened interest in NVIDIA, traders can seize tactical opportunities in the space with UBOT. UBOT provides returns equal to 200% of the daily performance of the Indxx Global Robotics and Artificial Intelligence Thematic Index.

That double dose of leverage allows shareholders to maximize profits without the use of a margin account and without the over-concentration risk of investing in a single stock like NVIDIA.

What AI Stocks Are In UBOT’s Benchmark?

UBOT’s benchmark seeks to provide exposure to developed markets companies expected to benefit from the adoption and utilization of robotics and/or artificial intelligence. This includes companies developing:

  • Industrial robots and production systems
  • Automated inventory management systems and platforms
  • Unmanned vehicles
  • Voice/image/text recognition software
  • Medical robots/robotic instrumentation

To be eligible for inclusion, stocks must have a minimum market capitalization of $100 million and at least $2 million in average daily turnover for the last six months.

UBOT’s expense ratio is 1.35%.

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