NVIDIA (NASDAQ:NVDA) is getting hit on 2 fronts today as the stock drops 5% as of 1:45 p.m. EST, curtailing the impressive 2 week run the stock was riding before today. News surfaced that the Biden administration is considering further export restrictions on U.S. Chips to certain Persian Gulf countries, according to Bloomberg from unknown sources. Other competitors of NVIDIA are also reeling today, Advanced Micro Devices (Nasdaq:AMD) is down 5% and Intel (Nasdaq:INTC) trading 2.4% lower.
The bigger news that is causing more of today’s hurt comes from ASML Holding (Nasdaq:ASML), a key supplier to chipmakers like Intel and Taiwan Semiconductor Manufacturing Company (TSMC). ASML’s orders fell significantly short of expectations, further dampening sentiment across the semiconductor industry, dragging the PHLX Semiconductor Index down by nearly 5%.
NVIDIA Leveraged ETFs: NVDX and NVDL
Both NVDX and NVDL are leveraged ETFs that provide 200% daily exposure to Nvidia’s stock performance. NVDX, the T-REX 2X Long Nvidia Daily Target ETF, and NVDL, the GraniteShares 2X Long Nvidia Daily ETF, are designed for traders looking to capitalize on short-term price movements.
So as NVIDIA stock shares declined, investors of these leveraged ETFs felt double the burn today. But as share of NVIDIA increase, the leverage works in the same. Even with today’s 10% drop in stock price for NVDX and NVDL, they are still up 23% the past month alone.
What’s Next for Nvidia?
Despite the recent dip, Nvidia’s future remains promising especially in the AI chip sector, where demand for its next-generation Blackwell systems is described as “intense.” Nvidia has already sold out Blackwell systems through the end of 2025, signaling that revenue in the coming year won’t be limited by demand but by how many systems the company can produce.
Wall Street analysts are starting to raise their 2025 earnings estimates and the stock could hit $200 per share, with some now predicting that Nvidia’s Blackwell chips could surpass revenue from its prior-generation Hopper chips as early as next year. The strength of Nvidia’s AI capabilities is a key driver of these positive revisions, and the company continues to maintain a dominant 85% market share in the AI chip market.
With Blackwell AI server systems now shipping and Nvidia’s leadership position in AI hardware secure, the company is positioned to continue benefiting from the AI boom. While geopolitical risks and trade tensions remain, the demand for Nvidia’s products remains strong, and its future growth prospects are bright.
Bottomline for NVDX and NVDL
Playing with a leveraged position significantly increases risk and are not investments many investors are comfortable taking on. However, if you see NVIDIA as the long term dominate player is the early stages of generative AI, NVDX and NVDL could be options to magnify your position.
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