Nvidia’s Stock Slide Has Taken a Toll on Semiconductor ETFs

Nvidia (NVDA) shares tumbled almost 9% last week after U.S. government officials announced more stringent curbs on exports of advanced AI chips to China, dragging down many technology-centric exchange-traded funds (ETFs) that are heavily exposed to the chipmaker.

The VanEck Semiconductor ETF (SMH), a $9.4 billion fund with almost 20% of its capital invested in Nvidia, fell more than 4% last week. The iShares Semiconductor ETF (SOXX), an $8.7 billion fund with a 7.8% weight in Nvidia, lost a similar amount.

The Invesco QQQ Trust (QQQ), a broad-based tech-centered ETF tracking the return of the Nasdaq 100 Index, fell almost 3% last week. Nvidia is the fund’s fourth-biggest holding, comprising just over 4% of its portfolio. The Vanguard Information Technology ETF (VGT), which holds a similar share of funds in Nvidia, fell over 3%.

While shares of Nvidia have fared poorly in recent days, their price has nearly tripled so far in 2023, making it the S&P 500’s best-performing stock this year.

Public Opinion Favors Export Restrictions, Antitrust Action

Nvidia’s A800 and H800 chips, which it designed specifically to sell to China under AI chip restrictions announced last year, are subject to the new rules laid out last week.

An AI Policy Institute (AIPI) survey of the U.S. public found 71% of respondents disapprove of Nvidia selling high-performance computer chips to China, versus just 18% who approve.

Another 63% of respondents said they would back antitrust legislation or related action against Nvidia, to prevent the company from attaining a disproportionate share of the semiconductor market.