Nvidia (NVDA) has become Wall Street's poster boy for every new area of technology that is white hot -- machine learning, artificial intelligence, autonomous cars and augmented and virtual reality. After a record breaking 2016, which saw the stock gain nearly 300%, the graphics processor maker is going to have a lot to live up to in investors eyes, with some experts not sure it can.
"We are Underweight [Nvidia] due to signs of desktop GPU market saturation, lower margins from incremental Nintendo Switch revenue and a possible sales pause in the company's data center business this summer," Pacific Crest Securities analyst Michael McConnell wrote in an investor note ahead of earnings.
Nvidia, led by CEO Jen-Hsun Huang, is still largely dependent upon the PC gaming market for the majority of its revenues, but its other areas, like data centers are growing fast, thanks to the explosion of machine learning and artificial intelligence over the past 12 months.
In the 2017 fiscal fourth-quarter, Nvidia had $2.17 billion in sales, including $1.348 billion from gaming. Its datacenter business accounted for $296 million, while automotive accounted for $128 million.
Nvidia's GPUs are some of the most advanced in the world and as datacenters, autonomous cars and other machines need heavier computing power, GPUs have been tasked with handling the problem.
Investors will be looking to hear what Nvidia has to say about its four main categories, as well as any updates to partnerships the company announced in recent months.
Analysts surveyed by Yahoo! Finance expect the company to lose an adjusted 67 cents a share on $1.91 billion in revenue for the period.
Over the past 12 months, shares of Tesla have gained nearly 194%, blowing away the near 11% gain in the S&P 500.
Here are five ETFs that may benefit if investors like Nvidia's first-quarter results.
iShares PHLX Semiconductor ETF
The $934 million iShares PHLX Semiconductor ETF (SOXX) has Nvidia make up 7.79% of its portfolio, charging investors an expense ratio of 0.48%.
BMO Capital Markets analyst Ambrish Srivastava expects a slowdown in the gaming market and more competition in the datacenter business, providing some tough headwinds for Nvidia.
"What we do believe is that as the year progresses, we expect a slowdown in gaming and competition in datacenter, to begin to show," Srivastava wrote in a note to investors. "We are reducing our estimates, now below consensus for FY18/FY19, largely on assumptions of lower growth in gaming, and somewhat due to lower assumptions for datacenter."
BMO has an underperform rating and a $85 price target on shares.
Aptus Behavioral Momentum ETF
The $33.4 million Aptus Behavioral Momentum ETF (BEMO) has Nvidia make up 6.07% of its portfolio, charging investors an expense ratio of 0.79%.
Pacific Crest Securities's McConnell, who rates Nvidia underweight with a $90 price target, expects in-line results this quarter.
"We expect weaker-than-expected desktop GPU sales to be offset by sequential growth in the company's data center segment, as well as late quarter-end GeForce 10-series GPU deals to notebook OEMs, which could carry unfavorable margin and/or inventory implications," the analyst wrote.
Industrial Innovation ETF
The $37.1 million Industrial Innovation ETF (ARKQ) has Nvidia make up 6.06% of its portfolio, charging investors an expense ratio of 0.75%.
Rosenblatt Securities analyst Hans Mosesmann believes in Nvidia's dominance in its core markets, one that he sees expanding.
"It is difficult to keep pace with Nvidia's GPU innovation cadence given GPU scale, the fact that CUDA software/compiler has become a defacto standard in GPGPU deployment, and secular trend of GPUs being used in more and more applications (green field for Nvidia)," Mosesmann wrote in an investor note. "There is simply no better story in the world of semis in terms of secular growth rates and margin expansion as a result of the company being a pure-play in AI."
Mosesmann has a buy rating and a $140 price target on shares.
VanEck Vectors Semiconductor ETF
The $585.1 million VanEck Vectors Semiconductor ETF (SMH) has Nvidia make up 5.03% of its portfolio, charging investors an expense ratio of 0.36%.
PowerShares Dynamic Semiconductors Portfolio ETF
The $244.1 million PowerShares Dynamic Semiconductors Portfolio ETF (PSI) has Nvidia make up 4.83% of its portfolio, charging investors an expense ratio of 0.63%.