Nvidia Corporation (NVDA) recently released its second-quarter earnings report, sending ripples through the market and sparking diverse reactions from exchange-traded funds (ETFs) associated with the company.
Following the earnings announcement, several ETFs saw significant changes in their pre-market trading. The GraniteShares 2x Long NVDA Daily ETF (NVDL) experienced a 3.41% decrease, while the T-Rex 2X Inverse NVIDIA Daily Target ETF (NVDQ) saw a 3.48% rise. This mirrored the contrasting performance of other ETFs, with ProShares Ultra Semiconductors USD and Direxion Daily NVDA Bull 2X Shares (NVDU) declining by 1.90% and 3.48% respectively. However, ETFs like Direxion Daily Semiconductor Bull 3X Shares (SOXL) and iShares Semiconductor ETF (SOXX) saw an increase of 1.09% and 0.57%, respectively.
The divergent responses from NVDA ETFs can be attributed to Nvidia’s Q2 performance. While the company surpassed expectations, driven by a strong performance in the data center segment, its gross margin contracted from the previous quarter. This contraction in gross margin led to a 3.6% drop in Nvidia’s share price in after-hours trading. The mixed responses among the ETFs reflect the market’s reaction to both the positive and negative aspects of Nvidia’s earnings report.
Prior to the earnings announcement, Nvidia ETFs had already shown mixed trading activity. The market anticipated strong results from Nvidia, but the company’s slight miss on gross margin expectations caused some investors to take a more cautious approach. The diversified responses from the ETFs highlight the complexity of the semiconductor industry and the challenges companies face in managing profitability while navigating growth opportunities.
