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The NVIDIA stock price continues to hover near its all-time high amid the rising artificial intelligence tailwinds. NVDA was trading at $178.25 on Wednesday, a few points below the all-time high of $183. With the stock up by 105% since April, is the 82% yielding NVDY ETF a better buy?
NVIDIA Stock Price Has Jumped Amid AI Tailwinds
The NVIDIA share price has been in a relentless bull run after soaring by nearly 1,300% in the last five years. It has done better than the broader S&P 500 and Nasdaq 100 indices and other blue-chip Magnificent Seven companies like Apple and Microsoft.
This growth happened because of the surging investments in artificial intelligence (AI) infrastructure. For example, recent data shows that the biggest American companies have spent over $155 billion on AI this year, and the momentum is accelerating.
AI spending is so big that it contributes about a two-quarter average to the US GDP. All this is benefiting NVIDIA, a company that manufactures the most advanced semiconductors for the sector.
The results for NVIDIA are evident. Its annual results show that it made over $26 billion in annual revenue in 2021, a figure that jumped to $130 billion last year. It made $44 billion in Q1, higher than in FY 2021.
Analysts are optimistic that the company’s growth has more room to go in the coming years. The average analyst’s estimate of its second-quarter revenue is $45.68 billion, a 52% surge from last year.
These analysts expect NVIDIA’s annual revenue to cross the $200 billion milestone this year, and then hit $254 billion in 2025. This growth may help turn NVDA into the first $5 trillion company.
NVIDIA Stock Share Price Technical Analysis
Technicals suggest that the NVDA stock price has more upside as the bullish momentum continues. The weekly chart shows that the stock recently invalidated the highly bearish double-top pattern by surging above the key resistance at $152.55. Invalidating that pattern is a highly bullish sign.
The Average Directional Index (ADX) has jumped to 23, the highest level since May 12. An ADX figure of 20 and above indicates that the trend is strengthening.
NVIDIA stock price has moved to the Weak, Stop & Reverse point of the Murrey Math Lines. This means it still has more upside to go before it reaches the extreme overshoot level of $250. Such a move will push its market capitalization to over $6 trillion.
Is NVDY ETF a Good NVIDIA Asset to Buy?
NVIDIA is a popular company because of its strong growth and the huge market share in the GPU industry. The company also pays much money in dividends and is actively repurchasing its stock.
However, the company has a tiny dividend yield of just 0.022%, which is negligible to most investors. An alternative to income investors is the YieldMax NVDA Option Income Strategy ETF (NVDY).
NVDY is a fund with over $1.8 billion and a dividend yield of 82% that gives investors exposure to the company. It uses the covered call strategy to generate this income.
In this, the fund invests part of the money in derivatives tracking the NVIDIA stock and then sells its call options. By writing the call options, the fund generates a premium, which it uses to distribute to investors.
NVDY’s benefit is that it lets investors benefit from the NVDA stock surge and a monthly dividend. The risk, however, is that it misses the long-term gains when NVIDIA shares surge since it usually hits the strike price.
As a result, as the chart below shows, the NVDY stock’s total return in the last 12 months was 51%, while NVIDIA’s was 77%. This year, the NVDA jumped by 32% and NVDY soared 18%.
Summary
NVIDIA stock price has been in a strong bull run this year amid AI tailwinds. The strong surge may continue ahead of its earnings later this month. While the NVDY ETF offers a huge dividend, its long-term total return is less attractive than that of NVIDIA.
