Although the debate about whether there is a foam in the AI investment boom led by Nvidia is still in full swing. But for many radical market participants, it seems that only Nvidia's increase at present cannot satisfy them
There are signs that many investors who are trying to take the lead in the AI frenzy are increasingly favoring an ETF that is twice as long as Nvidia, driving the trading volume and net inflow of funds of the ETF to historic highs in recent times.
According to data, following a record net inflow of $252 million last week, the trading volume of Nvidia's GraniteShares2x Long NVDA Daily ETF (code NVDL) doubled on Monday, reaching the second highest level in history.
Nvidia, the leading stock in the global artificial intelligence chip industry, fell another 2% on Monday, continuing the trend of over 5% decline last Friday. This rare decline in the hot chip stock has also triggered a new round of fierce game between bulls - bulls see it as a good opportunity to buy after adjustment, while bears believe that this adjustment is a sign of the beginning of a foam.
As the name suggests, NVDL provides investors with a return rate twice that of the long target stock Nvidia, and since its launch at the end of 2022, the fund size has increased to $1.4 billion. In the market, there are still many derivatives like NVDL that have been laid out by Nvidia, as more and more people believe that the AI era led by Huang Renxun is leading a profound technological transformation in the global economy, which will create new wealth creation opportunities in the stock market.
Last Friday, when Nvidia fell nearly 6%, NVDL's trading volume hit a new high, exceeding $2 billion. Investors invested a net $102 million in the fund on the same day, likely betting that Nvidia's stock price could undergo a short-term reversal.
Dave Lutz, head of ETFs at JonesTrading, believes that given the large trading volume of NVDL, its movements have even become a key indicator of retail sentiment and activity.
Meanwhile, according to Markit Securities data, the fund's short position ratio is very low, only 1.5%.
On Tuesday, when key CPI data from the US Department of Labor is released, Nvidia's resilience in this bull market will undoubtedly face further tests. Will CPI data lead to triple negative results? It is becoming a focal point for some industry insiders.
From an overall return perspective, NVDL's return rate so far this year has reached 156%, making it the second best performing ETF in the US market in 2024. The best performing ETF was also a fund that was twice as long as Nvidia - the T-Rex 2X Long NVIDIA Daily Target ETF (code NVDX), which was $269 million, rose by approximately 179%. Before mid January, NVDL was still a 1.5x long fund, which is the reason for its temporary underperformance.
Even after two consecutive days of decline, Nvidia, this AI chip leader, has still risen by over 70% so far this year, far leading the S&P 500 index among its constituent stocks.