Shares of Nvidia Corp. (NVDA) surged to record highs on Tuesday after the company revealed it expects to resume shipments of its H20 AI chips to China, thanks in part to a lobbying campaign by CEO Jensen Huang. The move, which could help restore billions in lost revenue, gave a boost to multiple ETFs.
Among the beneficiaries were U.S. stock ETFs with heavy Nvidia exposure, like the SPDR S&P 500 ETF Trust (SPY), which holds about 7.5% of its portfolio in Nvidia, and the Invesco QQQ Trust (QQQ), with a 9.5% allocation. The VanEck Semiconductor ETF (SMH), which has a 21% position in Nvidia, also benefited.
But U.S.-focused ETFs weren’t the only funds to gain on the Nvidia news.
The KraneShares CSI China Internet ETF (KWEB) also jumped nearly 3%, pushing it to a two-month high and a roughly 20% year-to-date surge.
KWEB’s gains reflect investor optimism that renewed access to Nvidia’s advanced chips—specifically the H20, a version tailored for the Chinese market—could give Chinese tech companies a leg up in the AI race.
While Chinese chip-makers like Huawei may face stiffer competition with Nvidia reentering the market, broader tech firms that rely on AI stand to benefit.
Top holdings in KWEB include Tencent, Alibaba Group Holding Ltd. (BABA), PDD Holdings Inc. (PDD), Meituan and JD.com Inc. (JD). While some of these companies are involved in building AI models, all are focused on consumer and enterprise applications that increasingly depend on AI infrastructure. Access to Nvidia’s chips helps accelerate those capabilities.
Still, investing in China remains fraught with uncertainty. The country’s tech ecosystem is large, innovative and fast-growing, but geopolitical tensions continue to loom. U.S.-China trade tensions linger, and the threat of renewed chip restrictions is ever-present.
For investors in Chinese tech ETFs, that means navigating a market full of potential but one that comes with plenty of potential headwinds.
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