Exchange traded funds (ETFs) that buy artificial intelligence stocks soared on Thursday after AI-enabled Nvidia Inc. beat profit expectations.
Global X Robotics & Artificial Intelligence ETF BOTZ,
The firm, which has about $3 billion in assets under management, closed 4.4% higher, according to FactSet data. Megacap semiconductor company Nvidia NVDA;
The ETF’s holdings were the largest on Wednesday at about 18.9% of net assets, according to holdings data on Global X’s website.
“Near-term momentum in AI stocks is likely to continue,” Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, said in a note Thursday. “For our positioning, we prioritize semiconductors and software, and see opportunities in AI edge computing, big tech, and the beneficiaries of their partners.”
Nvidia stock soared 16.4% on Thursday to an all-time high after the semiconductor company announced its latest quarterly results after the U.S. stock market closed on Wednesday. The megachip maker’s big rally made it the best-performing stock in the S&P 500 on Thursday, pushing the large-cap index to a new closing high and fueling a surge in the information technology sector in particular.
Round Hill Generative AI & Technology ETF CHAT and Invesco AI Next Generation Software ETF IGPT were among the AI-related exchange-traded funds whose shares soared on Thursday.,
Each has an increase of about 5%, according to FactSet data. Both funds are much smaller than the Global X Robotics & Artificial Intelligence ETF based on assets under management.
The other AI ETF that closed significantly higher on Thursday was the ROBO Global Artificial Intelligence ETF THNQ.,
Wisdom Tree Artificial Intelligence & Innovation Fund WTAI,
Global X Artificial Intelligence & Technology ETF AIQ,
iShares Robotics & Artificial Intelligence Multi-Sector ETF IRBO,
ROBO Global Robotics & Automation Index ETF ROBO,
FactSet data is displayed.
“The enthusiasm for AI remains the same”
So far, NVIDIA has “lived up to high expectations, and general enthusiasm for AI remains intact, which is broadly positive for the market,” said Sevens Report Research founder and president. Tom Essay said in a memo Thursday.
look: Nvidia stock price surge could add $200 billion to market cap, allowing for ‘huge growth’
“The question now is whether AI enthusiasm can continue to lift the market, or whether new leadership is needed now to push the S&P 500 above 5,100,” Essay said. “What will replace AI leadership is not obvious on the surface.”
The S&P 500 index SPX rose 2.1% on Thursday, ending at about 5,087. The S&P 500’s Information Technology sector XX:SP500.45 rose more than 4% on Nvidia’s surge, well outperforming the index’s 10 other sectors, according to FactSet data.
read: S&P 500 AI stocks have outperformed this year – and it’s not just the ‘Magnificent Seven’
However, Nvidia isn’t the largest holding in all AI-themed ETFs.
For example, the chipmaker ranked third in the iShares Robotics & Artificial Intelligence Multi-Sector ETF on Wednesday with a weight of almost 1.3%, according to data on BlackRock’s website. ARM Holdings ARM,
is the fund’s largest exposure at 1.7%, followed by Meta Platforms Inc. META;
It’s just over 1.3%.
Meanwhile, Nvidia’s surge on Thursday also sent shares of semiconductor-focused ETFs higher.
The iShares Semiconductor ETF SOXX ended 4.9% higher, while the VanEck Semiconductor ETF SMH jumped 6.8%, according to FactSet data.
Nvidia, which had the largest weight in both ETFs earlier this week, is one of the so-called Big Tech companies that generally has a large weight in the S&P 500 index.
Big tech stocks, a group of mega-corporations known as the Magnificent Seven spanning tech, communications services and communications discretionary sectors, all rose on Thursday, with Nvidia leading the way.
Shares of Round Hill Magnificent Seven ETF MAGS — whose holdings include Microsoft Corporation, MSFT,
Apple Inc. AAPL,
Nvidia, Amazon.com Inc. AMZN,
Facebook parent company Meta Platforms, Google parent company Alphabet Inc. GOOGL,
Google,
and Tesla Inc. TSLA,
— rose 4.8% on Thursday.
Nvidia also contributed to the rise in exchange-traded funds (ETFs) focused on tech stocks.
Vanguard Information Technology ETF VGT Shares,
The Technology Select Sector SPDR Fund XLK and iShares US Technology ETFIYW both rose more than 3% on Thursday, according to FactSet data.
U.S. stock markets generally rose, with the tech-heavy Nasdaq Composite Index leading the way for the major indexes, rising 3% on Thursday. The Dow Jones Industrial Average DJIA closed 1.2% higher, with software and computer services companies posting the biggest gains in the index, according to FactSet data.