NVIDIA ETFs: Navigating AI Expansion and Elevated Expectations
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Aug 29 2025
0mins
Source: NASDAQ.COM
NVIDIA's Second Quarter Results
- Revenue and Earnings: NVIDIA reported second-quarter revenue of $46.74 billion, marking a 56% year-over-year increase, with earnings per share at $1.05, surpassing Zacks Consensus Estimates of $46.14 billion in revenue and $1 earnings per share.
- Data Center Revenue: The data center segment, NVIDIA's largest business line, generated $41.1 billion, slightly below analyst expectations of $41.2 billion, but significantly up from $26.2 billion in the same quarter last year.
Market Reactions and Future Guidance
- Stock Performance: Following the earnings release, NVIDIA shares fell by 0.8% on August 28, 2025, reflecting investor concerns despite strong overall results.
- Third-Quarter Outlook: NVIDIA anticipates third-quarter sales of $54 billion, indicating a 15% year-over-year growth, even without contributions from China, which previously accounted for about 20% of its data center revenue.
Demand and Supply Dynamics
- AI Demand: The report indicates robust demand for AI, with ongoing shortages leading customers to purchase older models. Morgan Stanley's Joseph Moore suggests that NVIDIA's guidance may understate true demand due to these shortages.
- Future Product Launches: NVIDIA's next-generation Blackwell systems are expected to be more widely available in the second half of 2025.
Broader Market Implications
- Impact on Related Stocks: Other AI-related stocks, such as Micron and Broadcom, saw gains following NVIDIA's earnings, indicating a positive sentiment in the AI sector.
- Enterprise AI Adoption: Companies like Snowflake reported better-than-expected results, further reflecting strong enterprise AI adoption.
Risks and Challenges
- Dependence on Big Tech: NVIDIA's revenue is heavily reliant on major tech companies, which account for approximately 41% of its annual revenue. Concerns about potential cuts in Big Tech's capital expenditures could pose risks to NVIDIA's future performance.
- Profitability Concerns: CFO Colette Kress highlighted rising operating expenses that may compress margins in the latter half of the year, raising questions about future earnings sustainability.
Geopolitical and Competitive Landscape
- China Market Dynamics: NVIDIA's business in China remains uncertain due to regulatory negotiations and increasing competition from local firms like Huawei and Cambricon.
- Valuation Concerns: NVIDIA shares have appreciated 26% year-to-date and 48% over the past year, but high valuations raise skepticism among investors regarding future earnings growth.
Investment Strategy
- ETF Recommendations: Given the uncertainties surrounding individual stocks, investing in semiconductor and AI-focused ETFs, such as the Strive U.S. Semiconductor ETF and VanEck Semiconductor ETF, is suggested to mitigate company-specific risks.
Analyst Views on SHOC
Wall Street analysts forecast SHOC stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for SHOC is USD with a low forecast of USD and a high forecast of USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
0 Analyst Rating
0 Buy
0 Hold
0 Sell
Current: 76.091
Low
Averages
High
Current: 76.091
Low
Averages
High
No data
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
