Zhitong Finance learned that although the stock price of Wall Street's artificial intelligence darling continued last Friday's decline, as trading volume and capital inflows reached record highs, people who are bullish on artificial intelligence are increasingly fond of an ETF that is twice as long as NVDA.US (NVDA.US). Following a record $252 million in new funding last week, the trading volume of the GraniteShares2x Long NVDA Daily ETF (NVDL.US) reached the second-highest level in history on Monday. The fund provides investors with daily returns twice that of Nvidia and has grown to $1.4 billion since its launch at the end of 2022.
Nvidia has become an investment tool for investors large and small, and these investors are convinced that the company is taking advantage of profound technological changes in the global economy to create new wealth creation opportunities for the stock market. On Friday, when Nvidia's shares fell nearly 6%, the fund hit a record high in trading volume, with a transaction value of over $2 billion. On the same day, investors made a net injection of $102 million into the fund, probably betting on a short-term reversal of the semiconductor stock.
According to Dave Lutz, head of ETFs at JonestTrading, considering the size of ETF trading volume, “the level of activity of NVDL is a key indicator reflecting the sentiment and activity of retail investors.” Meanwhile, according to Markit Securities, the short share in the fund is very low, only 1.5%.
Since the beginning of the year, NVDL has a return of 156%, making it the second-best performing ETF in the US in 2024. The best-performing ETF was also a fund that doubled Nvidia's — the $269 million T-Rex 2X Long NVIDIA Daily Target ETF (NVDX.US), an increase of about 179%. Prior to mid-January, NVDL had a price-earnings ratio of 1.5 times, which is the reason for its poor performance.
Earlier, Dan Ives (Dan Ives), a senior analyst at Wedbush Securities, a well-known Wall Street investment agency, also said that the large-scale sell-off experienced by AI chip leader Nvidia in the US stock market on Friday was not a sign of an “artificial intelligence stock bubble,” but rather a concentrated reflection of the “digestion period” of some Wall Street fund managers underestimating artificial intelligence capabilities and investors' “profit settlement” operations.
Even after two consecutive days of Nvidia's decline, the stock is up more than 70% so far this year. Nvidia's staying power of gains will be tested on Tuesday. At that time, the US CPI data for February will be released, and market risk sentiment will be tested.