Why investors are watching ETFs closely before Nvidia releases quarterly earnings results?

NVIDIA delivered another quarter that would have looked remarkable for almost any other company, but the bar for NVIDIA has been set so high that even strong results are met with scrutiny rather than celebration.

Revenue came in at $81.6 billion for the quarter ended April 26, 2026, comfortably exceeding the analyst consensus expectation of $78.8 billion and continuing a streak of top-line beats that has become almost expected.

Earnings per share of $1.87 also beat the $1.76 consensus estimate, extending Nvidia’s track record of delivering better than Wall Street models. Analysts had been projecting roughly 73% revenue growth and 67% earnings growth for the full fiscal year 2027, and the Q1 numbers kept that trajectory intact.

Despite all of that, the stock did not respond the way many investors who bought ahead of the report were expecting.

When you are a company carrying a market capitalization of approximately $5 trillion, beating estimates is already priced in, and the market needs a genuine surprise to push the price meaningfully higher after a strong run.

NVIDIA’s stock had already rallied more than 60% over the twelve months leading into the report and was hovering near record highs going into earnings.

That context matters enormously for understanding why a beat did not produce the kind of post-earnings pop that newer investors might have been anticipating.

Why is the data center segment so important to Nvidia’s story right now?

NVIDIA’s business has transformed dramatically over the past several years, and the data center segment is now so dominant that it essentially is the company’s story for investors.

In its most recent quarter before the May 20 report, data center revenue accounted for 91.5% of total sales, a concentration that would be alarming in most businesses but reflects genuine demand from the world’s largest technology companies.

Even more striking is the networking revenue figure within that segment, which rose 263% year over year. That number tells investors that Nvidia is not just selling individual graphics chips but is building out complete AI infrastructure systems that customers are buying at an extraordinary scale.

CEO Jensen Huang described the current environment in the last earnings call as computing demand growing exponentially on agentic AI, with enterprise adoption of AI agents skyrocketing and customers racing to invest in what he called the AI industrial revolution.

That kind of language from a CEO who has consistently delivered on big claims carries real weight with institutional investors.

The hyperscalers, meaning Microsoft, Google, Amazon, and Meta, have all publicly committed to massive AI capital expenditure plans for 2026 and beyond. Those spending commitments flow directly into Nvidia chip orders, giving the company unusual revenue visibility for a hardware business.

Gaming, automotive, and professional visualization segments still exist within Nvidia’s revenue mix but have become relatively small compared to the data center behemoth.

Investors watching this stock need to understand that it is now primarily a bet on continued AI infrastructure spending rather than the graphics card company many people knew it to be a decade ago.

What is the China situation, and why does it matter for future growth?

One of the most significant disclosures from Nvidia’s recent commentary is CEO Jensen Huang’s confirmation that the company’s market share of AI accelerators in China has dropped to zero. That is a stark statement that deserves more attention than it typically receives in mainstream earnings coverage.

China was once a meaningful market for Nvidia’s data center chips before U.S. export controls began restricting what the company could sell there.

The restrictions were designed to prevent advanced AI chips from being used to develop military applications or to give Chinese technology companies capabilities that could compete with American AI leadership.

Losing Chinese market share entirely does not break Nvidia’s near-term earnings story because demand from U.S. cloud providers and enterprise customers has more than compensated for that lost revenue. However, it does represent a ceiling on Nvidia’s total addressable market that would not exist in a world without export restrictions.

The geopolitical dimension of this risk is real and worth monitoring. Any escalation in U.S.-China technology tensions could affect how Nvidia’s largest customers think about long-term supply chain reliability, and it creates uncertainty about what percentage of global AI chip spending Nvidia can realistically capture going forward.

There is also a secondary effect worth considering. Chinese technology companies that cannot access Nvidia chips have strong incentives to develop domestic alternatives, and several well-funded Chinese chipmakers are working on exactly that.

The export controls that protect Nvidia’s dominance in the US market are simultaneously accelerating the development of competitors in China.

This does not change Nvidia’s investment case dramatically in the near term, but investors building a multi-year thesis around the stock should factor in the possibility that China’s AI chip market becomes largely inaccessible for the foreseeable future.

Are traditional semiconductor ETFs a smarter way to play Nvidia’s earnings?

For many investors, buying a semiconductor ETF rather than Nvidia stock directly is a more sensible approach to capturing the AI hardware theme, and the logic behind that preference is straightforward.

NVIDIA’s earnings are now so widely anticipated and so heavily analyzed by professional traders that the stock’s short-term reaction has become essentially unpredictable for individual investors without access to real-time options flow and institutional positioning data.

The VanEck Semiconductor ETF, known by its ticker SMH, holds 26 semiconductor companies with Nvidia as its largest position at roughly 18.6% of the fund. Taiwan Semiconductor and Broadcom round out the top three holdings, giving investors meaningful exposure to the AI chip supply chain beyond Nvidia alone.

The Strive U.S. Semiconductor ETF under ticker SHOC takes a slightly more concentrated approach with Nvidia at approximately 20.46% of the fund, followed by Broadcom at 18.53% and Micron Technology at 7.41%.

All three of these companies have significant exposure to AI-related demand, meaning the fund moves closely with the AI infrastructure spending theme, even though it is diversified across multiple names.

The VanEck Fabless Semiconductor ETF under ticker SMHX focuses specifically on companies that design chips without owning their own manufacturing facilities, with Nvidia at the top at around 20.74%, followed by Broadcom and Advanced Micro Devices.

The fabless model is particularly interesting from an AI perspective because it concentrates on the highest-margin part of the semiconductor value chain.

All three of these ETFs have delivered strong year-to-date performance, with SHOC up approximately 42.5%, SMH gaining around 40.5%, and SMHX rising about 26.5% in their respective tracking periods. Those returns reflect how central semiconductor companies have been to the broader AI investment theme.

What should long-term investors actually do with Nvidia exposure right now?

The most useful framing for individual investors thinking about Nvidia is to separate the earnings event from the multi-year investment thesis.

NVIDIA’s stock, trading at roughly 27 times this year’s projected earnings, with analysts forecasting 73% revenue growth for the full fiscal year, is a valuation that looks reasonable if the AI infrastructure spending cycle continues at anything close to its current pace.

The buy-the-rumour-sell-the-news pattern that has characterized Nvidia’s post-earnings stock behavior over the past year is a short-term phenomenon driven by traders taking profits after strong runs into earnings.

Investors who exited after those post-earnings dips consistently ended up worse off than those who held through the volatility and waited for the stock to recover.

The competitive landscape is evolving in ways that deserve ongoing monitoring, even if they are not immediate threats. AI chip startups attracted $8.3 billion in global venture funding in 2026, and Nvidia’s own biggest customers, including Meta, are actively developing proprietary AI chips to reduce dependence on third-party hardware.

These trends will take years to materially affect Nvidia’s revenue, but they are the right things to watch as leading indicators.

For investors who want Nvidia exposure but feel uncomfortable with the volatility of a concentrated single-stock position, the semiconductor ETFs discussed earlier represent a genuinely sensible middle ground.

They capture the AI hardware theme, include Nvidia as a major holding, and provide the kind of diversification that smooths out the sharp moves that inevitably accompany Nvidia’s quarterly earnings releases.

TL;DR

• NVIDIA reported fiscal Q1 2027 earnings on May 20, 2026, beating revenue expectations with $81.6 billion against a forecast of $78.8 billion and delivering earnings per share of $1.87 versus the $1.76 that analysts predicted.
• Despite beating on both metrics, the stock did not respond positively, continuing a pattern where Nvidia’s share price has declined in three of the four quarters immediately following earnings beats.
• NVIDIA’s data center segment accounted for 91.5% of total sales in its most recent quarter, with networking revenue inside that segment rising 263% year over year.
• CEO Jensen Huang confirmed Nvidia’s market share of AI accelerators in China has dropped to zero, introducing meaningful policy risk around export controls and future international revenue.
• AI chip startup rivals attracted $8.3 billion in global funding in 2026, signalling that competition for Nvidia’s dominant position is attracting serious capital, even if it is not an immediate earnings threat.

This article was made with AI assistance and human editing.

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