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4 stocks benefitting from NVIDIA's explosive growth

illustration of semiconductor chip showing AI processor power with blue coloring

In the wake of Nvidia Corporation's (NASDAQ: NVDA) staggering earnings report, the U.S. stock market surged to new heights, buoyed by the tech titan's resounding success. With stocks basking in record territory, the S&P 500 and Dow Jones Industrial Average soared to unprecedented levels following Nvidia's blockbuster performance.

On Friday, Nvidia achieved a monumental milestone, crossing the coveted $2 trillion valuation for the first time in its history. This feat firmly solidified Nvidia's position as the third-largest company in the U.S. by market capitalization, trailing only behind behemoths like Apple and Microsoft Corporation (NASDAQ: MSFT).

As the stock reached a high of $823.94 on Friday, the hype surrounding Nvidia intensified, propelling what can only be described as A.I. mania. Year-to-date, Nvidia has witnessed an astounding surge of nearly 60%, with a jaw-dropping 238% increase over the previous year, underscoring the company's explosive growth trajectory.

Amidst this frenzy, it becomes evident that Nvidia's success reverberates far beyond its corporate borders. Several other stocks have found themselves in the slipstream of Nvidia's meteoric rise, leveraging unique partnerships or benefiting substantially from the tech giant's unparalleled growth trajectory. 

Four stocks benefitting from Nvidia’s explosive growth

Taiwan Semiconductor Manufacturing (NYSE: TSM)

Taiwan Semiconductor Manufacturing Company is the premier global semiconductor foundry, specializing in manufacturing semiconductors for various companies according to their specifications. Founded as a pure-play semiconductor foundry, TSM continues to dominate this niche market. 

Its client base includes significant technology firms like Advanced Micro Devices Inc. (NASDAQ: AMD), Apple Inc. (NASDAQ: AAPL), Nvidia, and Broadcom Inc. (NASDAQ: AVGO). Even semiconductor manufacturers with their production facilities, such as Intel Corporation (NASDAQ: INTC) and Texas Instruments Inc. (NASDAQ: TXN), leverage TSM's expertise to some extent.

The company, which manufactures chips for Nvidia, has seen its stock rise an impressive 24.55% year-to-date and almost 50% over the previous year. Despite those impressive gains, it's still trading at a modest 25x P/E and offers a 1.18% dividend yield. TSM has projected earnings growth of 23.5% and a moderate buy rating based on five analyst ratings. (NASDAQ: AMZN)

AWS and Nvidia have partnered for over a decade to provide customers with robust, cost-efficient, and adaptable GPU-based solutions. These collaborative efforts range from cloud services featuring Amazon EC2 instances powered by Nvidia GPUs to edge computing solutions like AWS IoT Greengrass integrated with Nvidia Jetson Nano modules. 

Globally, customers leverage these solutions for various applications, including machine learning, virtual workstations, high-performance computing, and IoT services. Nvidia GPU-powered Amazon EC2 instances offer scalable performance for rapid ML training, economical ML inference, versatile remote virtual workstations, and potent HPC computations. At the edge, AWS IoT Greengrass extends many AWS cloud services to Nvidia-based edge devices, enabling local data processing and action.

Amazon shares have significantly outperformed the broader market, with its stock up over 87% over the previous year and already up over 15% year-to-date. The stock has impressive earnings growth projected at 30.54% and a buy rating based on forty-four analyst ratings. 

Super Micro Computer (NASDAQ: SMCI)

Super Micro Computer is a prominent figure in the technology sector, boasting a 30-year legacy. The company specializes in cutting-edge computing solutions catered to data centers, cloud providers, and enterprises. SMCI has emerged as a significant player in manufacturing computers optimized for data center operations, facilitating tasks such as website hosting, data storage, and A.I. applications.

The company diligently monitors Nvidia's product development to ensure seamless compatibility and swift integration of Nvidia's innovations into its products. This approach extends to other chip manufacturers, allowing Supermicro to capitalize on the growth across the industry. 

Supermicro has witnessed an explosive surge in its stock thanks to recent blowout earnings. Over the previous three months, the stock has surged over 200% and a remarkable 776% from a year earlier. While its current P/E of 67.14 might not be attractive, its forward P/E of 29.91 and consensus rating of moderate buy paint a more appealing image.

Direxion Daily Semiconductors Bull 3x Shares (NYSE: SOXL)

The Direxion Daily Semiconductor Bull 3X Shares (SOXL) is an exchange-traded fund (ETF) tracking the ICE Semiconductor index. This ETF offers investors three times the daily exposure to a modified market-cap-weighted index comprising 30 semiconductor companies listed in the U.S.

The ETF's largest individual stock holding is Nvidia, with a 6.79% weighting, making the ETF correlated to Nvidia and its significant directional moves. As the broader sector and NVDA have surged higher over the previous year, so too have shares of the ETF. Year-to-date, SOXL is up almost 28% and over 180% over the previous year. 

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