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Surprising Value in NVDA Could Lift a Thrilling ETF

BY | ETF Database
5:42 am ET 08/04/26 | 26 VIEWS
It’s rare that artificial intelligence (AI) stocks and value are linked, but with the stock 17.54% below its 52-week, Nvidia (NVDA) is gaining some acclaim as a value play.That could be to the benefit of traders considering the Direxion Daily NVDA Bull 2X Shares (NVDU A-), which seeks to deliver 200% of the daily performance of the semiconductor stock. Admittedly, value is a long-term investing style and NVDU is certainly not a long-term instrument, but the geared ETF could benefit if the value crowd beckons for once high-flying Nvidia. Perhaps adding to the allure of NVDU as an occasional way of playing Nvidia from a value perspective is that the AI stock isn’t a value name in the strictest sense of the word. Rather, it’s more of a growth at a reasonable price (GARP) idea. That indicates that it’s retaining growth prospects that could support the case for sporadic use of NVDU. “Our $280 fair value estimate implies price/adjusted earnings multiples of 30 times for fiscal 2027 and 20 times for fiscal 2028,” noted Morningstar’s Brian Colello. “Given the acceleration in AI capital spending we expect for the industry in calendar 2026, we model 80% total revenue growth for Nvidia in fiscal 2027.” That $280 fair value estimate is well above Nvidia’s July 30 closing price of $195.04.AI Infrastructure Spending Tells the StoryPotentially adding to the case for value in Nvidia and consideration of NVDU by short-term traders is the point that hyperscalers remain undaunted in their AI spending plans. By some estimates, hyperscalers could spend as much as $700 billion this year, with global AI infrastructure spending exceeding that figure in the coming years. “Nvidia foresees $3 trillion-$4 trillion of annual AI infrastructure spending by 2030,” added Colello. “Nvidia is expanding nicely in AI. It’s supplying industry-leading GPUs but also moving into networking, software, and services to tie these GPUs into even more powerful clusters.” AI spending trends will likely prove durable, and that durability is building at a time when Nvidia is unusually attractive from a valuation perspective. Assuming the company can mitigate margin erosion, the stock offers credible rebound potential and that would likely benefit the geared NVDU. “We expect Nvidia to achieve mid-70s gross margins in fiscal 2027. We anticipate modest gross margin deterioration to the high 60s a decade from now. We think GAAP operating margins will hover in the high 50s to the mid-60s in each year of our 10-year forecast, depending on the pace of research and development spending,” observed Colello.For more news, information, and analysis, visit the Leveraged & Inverse Content Hub.

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