ETFs to Gain as NVIDIA Views $1 Trillion in Chip Orders by 2027

In a stunning revelation at its latest annual GTC conference, NVIDIANVDA CEO Jensen Huang announced that the company now expects to secure up to $1 trillion in chip orders for its next-generation AI platforms — Blackwell and Rubin — by 2027. This is double the $500 billion forecast Huang had projected last year. 

The news sent shares of the chip giant up as much as nearly 4% in the intra-day trading session yesterday and ultimately closed with a 1.7% hike, underscoring the market's sensitivity to any signal about the longevity of the AI boom. 

For investors, this provides a powerful growth catalyst for NVDA along with the numerous exchange-traded funds (ETFs) that have this stock in their top holdings, setting the stage for broad-based gains.

Against this backdrop, it is crucial to understand the assumptions behind NVIDIA’s $1 trillion order forecast and the additional growth drivers that can sustain its momentum and benefit its ETFs over the long term.

The $1 Trillion Rationale

The primary driver for this trillion-dollar outlook is the transition from AI "training" to massive-scale AI inference. While NVIDIA’s chips have been essential for training large AI models, the next wave of growth hinges on "inference" — the process of AI models performing tasks for users in real time. 

As Huang stated, with computing demand having increased 1 million times in the last two years, this shift from training to inference requires massive computational power. This, in turn, should usher in significant demand for NVIDIA chips, based on which Huang has aggressively upgraded his projection. 

In particular, NVIDIA’s new Vera Rubin architecture, the successor to Blackwell, is designed specifically for this "Inference Inflection." With 72 Rubin GPUs and 36 Vera CPUs, these systems offer a 10x leap in performance per watt, drastically reducing the "cost per token" for enterprises. 

To secure its future in this business model, NVDA shelled out $20 billion in December to acquire Groq, a startup specializing in low-cost, high-speed inference. This technology, which analysts note offers 100 times lower latency at 20% of the cost, is expected to be integrated into NVIDIA’s dominant CUDA platform, creating a virtually insurmountable moat against rivals like Advanced Micro Devices (AMD) and custom in-house chips from tech giants.

Other Growth Engines

While GPUs remain the crown jewel, NVIDIA’s momentum isn't solely reliant on chip architecture. To ensure its processors work faster and more efficiently together, the company has invested $2 billion each in laser and photonics manufacturers LumentumLITE and Coherent COHR. These lasers use light to speed up communication between chips, a critical innovation as data centers grow more complex.

With almost 60% of its business coming from just five hyperscale customers (like Microsoft and Meta), NVIDIA is broadening its AI portfolio. The company is making an aggressive push into CPUs with the Vera processor, directly challenging legacy players. 

Beyond data centers, NVIDIA's Automotive segment is flourishing, with giants like BYD and Nissan adopting the Drive Hyperion platform for robotaxis, and a new Space Module bringing orbital AI to satellite networks.

As these adjacent businesses scale alongside flagship GPUs, NVIDIA should continue to see incremental revenue streams over the long run that can help maintain elevated margins and earnings growth.

Windfall for ETF Holders

For investors who aren't comfortable picking single stocks, this environment strongly favors several tech-heavy ETFs with significant NVIDIA exposure. As NVIDIA’s valuation climbs on the back of this trillion-dollar vision, these funds, mentioned below, are poised to ride the wave:

VanEck Semiconductor ETFSMH

This fund, with net assets worth $43.98 billion, offers exposure to 26 companies involved in semiconductor production and equipment. NVIDIA holds the first position in this fund, with 18.91% weightage. 

The fund has surged 74.7% over the past year. It charges 35 basis points (bps) as fees and traded at a good volume of 10.28 million shares in the last trading session. 

State Street Technology Select Sector SPDR ETFXLK

This fund, with net assets worth $88.15 billion, offers exposure to 71 companies from technology hardware, storage and peripherals; software; communications equipment; semiconductors and semiconductor equipment; IT services; and electronic equipment, instruments and components industries. NVIDIA holds the first position in this fund, with 15.14% weightage. 

The fund has soared 31.7% over the past year. It charges 8 bps as fees and traded at a good volume of 16.62 million shares in the last trading session. 

Invesco QQQQQQ

This fund, with net assets worth $389.16 billion, offers exposure to 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization. NVIDIA holds the first position in this fund, with 8.74% weightage. 

The fund has soared 27.1% over the past year. It charges 18 bps as fees and traded at a good volume of 48.95 million shares in the last trading session. 

iShares Semiconductor ETFSOXX

This fund, with net assets worth $21.32 billion, offers exposure to 30 U.S. companies that design, manufacture and distribute semiconductors. NVIDIA holds the second position in this fund, with 7.26% weightage. 

The fund has surged 68.7% over the past year. It charges 34 bps as fees and traded at a good volume of 7.95 million shares in the last trading session. 


 

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This article originally published on Zacks Investment Research (zacks.com).

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