Enthusiasm for Nvidia Corporation (NASDAQ: NVDA) has exploded in recent years.
With the chip giant up more than 2,000% in the past 5 years, it's hard to argue it's been anything but a success story.
In recent quarters, Nvidia investors have gathered at 'watch parties', eagerly waiting to see whether their investment has smashed market expectations yet again.
Last week, Nvidia hosted its annual Global Artificial Intelligence (GTC) conference. Nvidia CEO and Founder Jensen Huang showcased the latest developments in artificial intelligence (AI), including the latest in agentic and generative AI and other groundbreaking developments.
The future certainly looks bright for investors.
A moment for the bear case
However, Nvidia's recent share price tells a different story, having fallen around 20% from its peak.
A steep sell-off is not uncommon for Nvidia. It has declined at least 20% (and even 50%!) several times since its founding in 1993. But with Nvidia now a much bigger company (at around US$3 trillion), there are legitimate concerns about how much bigger it can get.
In its most recent quarterly earnings, investors fixated on the decline in its gross margin, which dropped 1.6% from the prior quarter to 73%. Management stressed this was due to the ramping up of its latest graphics processing unit (GPU) Blackwell. However, the market was less than convinced, with the stock sliding 8% in the next trading session.
It should come as no surprise that competition has also risen. We've already seen it with DeepSeek, a Chinese AI model that develops large language models, which caught the market by surprise earlier in the year. It's understandable that this has made some investors nervous and perhaps less inclined to go all in.
What to do?
Get a slice of Nvidia with these 3 ASX ETFs
ASX investors looking for exposure to Nvidia but want to account for competition are in luck.
Three ASX exchange-traded funds (ETF) hold Nvidia among their top holdings, with smaller exposure to other leading tech companies.
BetaShares Nasdaq 100 ETF (ASX: NDQ), which tracks the performance of the NASDAQ-100 Index (NASDAQ: NDX), holds Nvidia as its second-largest position. It comprises a sizeable 8.0% of the fund. Meanwhile, its largest holding is Apple (NASDAQ: AAPL), which makes up 8.9% of the fund. This ETF has a management fee of 0.48%, which is excellent value given that the fund is up more than 100% over the past five years.
Similarly, the Global X US 100 ETF (ASX: U100) offers 8.9% exposure to Nvidia, with the other top holdings comprising Apple and Microsoft (NASDAQ: MSFT). Having only been listed for less than a year, it's harder to judge its long-term track record. However, at just 0.18%, its management fee is considerably lower than that of the BetaShares Nasdaq 100 ETF.
Global X Semiconductor ETF (ASX: SEMI) is another option. It invests in companies that benefit from the adoption of devices powered by semiconductors. That, of course, includes Nvidia, which is why it ranks as the third largest holding, comprising 9.1% of the ETF. Other top holdings are ASML Holding NV (NASDAQ: ASML) and Taiwan Semiconductor Manufacturng Co Ltd (TPE: 2330), which provide other critical tools in the semiconductor supply chain. Having risen more than 60% over the past 5 years, this ETF has been another good choice for investors.
Foolish takeaway
Nvidia's recent performance has left investors wondering whether or not it has peaked.
On the one hand, CEO and Founder Jensen Huang makes a compelling case for the company's next phase of growth. However, having already reached the US$3 trillion mark (and briefly taking the crown as the world's most valuable company), is it time for investors to take some risk off the table?
That is the trillion-dollar question that may not need to be answered.
The good news for investors is that a diversified ASX ETF could deliver superior returns over simply picking a couple of market-beating winners. With Grand View Research estimating the AI industry to grow at a compound annual growth rate (CAGR) of 35.9% until 2030, there's plenty of room for more than just Nvidia to succeed.
