Nvidia Helping to Ease the Pressure on Semiconductor ETFs

Nvidia Corp (NasdaqGS: NVDA) shares surged Monday, bucking the broad market trends and helping out semiconductor sector-related exchange traded funds.

The iShares PHLX Semiconductor ETF (NasdaqGS: SOXX) dipped 0.1% on Monday.

Meanwhile, Nvidia shares advanced 3.4% on Monday. NVDA makes up 7.6% of SOXX’s underlying portfolio.

Nvidia shares strengthened after Morningstar analysts raised their ratings on the chipmaker.

“After taking a fresh look at our thesis on Nvidia, we are raising our moat rating to wide from narrow, thanks to intangible assets related to the design of graphics processing units (GPUs),” Morningstar analyst Abhinav Davuluri said in a note.

The positive economic moat rating on Nvidia comes after similar positive notes in recent weeks from investment banks including KeyBanc, BMO Capital Markets, and Mizuho, which have upgraded their price targets for Nvidia stock, according to the Motley Fool.

Despite the recent selling pressure, Nvidia has also been rallying this year, becoming one of the top 10 U.S. public companies in the process after accumulating a market value of around $453 billion, the Wall Street Journal reports.

Analysts have extolled Nvidia chips’ parallel-computing capabilities, which make them better than rivals’ for artificial intelligence performance and mining cryptocurrencies. For example, Nvidia’s graphics processors have been utilized for mining Ethereum. The graphics card maker also has plans to sell cards specifically used for cryptocurrency mining and even implemented technical adjustments to make traditional gaming processors less efficient for miners.

Analysts also anticipate Nvidia to enjoy a boost from technology and autonomous vehicle companies that will incorporate chips to navigate traffic or track online behavior.

“The company is the biggest and best supplier of parallel computing,” Ambrish Srivastava, analyst at BMO Capital Markets, told the WSJ. “It’s hard to compete against that.”

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