ETFs to Buy as NVIDIA Nears $30 Billion Investment in OpenAI

In a significant strategic pivot, NVIDIA NVDA is reportedly in the final stages of negotiating a $30 billion equity investment in OpenAI, part of a blockbuster funding round that could value the ChatGPT maker at approximately $730 billion. This move officially replaces the previous multi-year infrastructure partnership between these two companies, worth $100 billion, announced in September last year (as stated by Financial Times).

With generative artificial intelligence (AI) in focus worldwide, this development thrusts NVIDIA back into the global spotlight while simultaneously boosting the outlook for diversified exchange-traded funds (ETFs) that count the chipmaker as a cornerstone holding.

This recalibrated deal structure underscores how fast the AI capital cycle is evolving, and it sets the stage for investors to decide whether to express their AI conviction via NVIDIA directly or through diversified ETFs that still heavily leverage its upside while softening single stock risk. For that, we need to look at what changed and what uncertainties remain.

The Pivot: Inside NVIDIA’s Scaled Down $30B Bet

The decision to transition from a $100 billion "milestone-based" plan to a $30 billion equity stake is widely seen as a "de-risking" move by NVIDIA CEO Jensen Huang. The original $100 billion proposal was tied to massive, long-term power and infrastructure deployments that faced regulatory scrutiny, along with internal and market concerns over capital efficiency. 

By pivoting to a $30 billion direct investment, NVIDIA gains immediate equity in the most valuable AI company on Earth without the logistical "insanity" of managing 10-gigawatt data center projects. On the other hand, this $30 billion deal ensures that OpenAI will reinvest a significant portion of the new capital in purchasing NVIDIA’s latest-generation GPUs. 

Further, by owning a significant piece of OpenAI, NVIDIA ensures its software ecosystem (CUDA) remains the industry standard, which should prevent OpenAI from pivoting too quickly to custom internal silicon.

Thus, this deal seems like a "win-win" situation for NVDA, with product demand secured alongside equity upside widely seen as a long-term bullish signal that should support the company’s share price by reinforcing its central role in the AI boom.

Why Choose ETFs over NVDA?

While the $30 billion investment is a positive growth catalyst for NVIDIA, it doesn't eliminate the significant uncertainties clouding the broader AI industry. As the industry is currently navigating through a phase of extreme volatility, while NVIDIA is the clear winner today, concerns over "vendor financing"(where a company funds its own customers), along with potential regulatory headwinds in the United States, remain. If the "AI bubble" faces a correction, individual stocks like NVDA might experience the sharpest pullbacks.

On the other hand, ETFs offer a "safety net" by spreading exposure across the entire AI value chain—from chipmakers and cloud providers like Microsoft MSFT to energy firms powering the data centers like GE Vernova GEV—ensuring that your portfolio isn't solely dependent on the success of a single $30 billion deal.

NVDA-Heavy ETFs to Buy

Considering the aforementioned discussion, betting on a diversified basket of stocks through ETFs, like those mentioned below, can help investors mitigate the impact of the AI industry-wide turbulence or company-specific headwinds.

VanEck Semiconductor ETF SMH

This fund, with total net assets worth $45.89 billion, offers exposure to 26 companies involved in semiconductor production and equipment. NVDA holds the top spot in this fund, with 18.51% weightage. Tech giants Taiwan Semiconductor TSM (10.89%) and Broadcom AVGO (8.04%) hold the second and third positions in this fund, respectively. 

SMH has rallied 59.1% over the past year. The fund charges 35 basis points (bps) as fees. It currently sports a Zacks ETF Rank of 1 (Strong Buy) and traded at a good volume of 4.01 million shares in the last trading session. 

iShares Core S&P 500 ETF IVV    

This fund, with total net assets worth $751.09 billion, offers exposure to the 503 largest U.S. stocks by market capitalization. NVDA holds the top spot in this fund, with 7.76% weightage. Two of the magnificent seven stocks, Apple AAPL (6.63%) and MSFT (5.04%), hold the second and third positions in this fund, respectively. 

IVV has gained 12.1% over the past year. The fund charges 3 bps as fees. It currently sports a Zacks ETF Rank of 2 (Buy) and traded at a good volume of 4.77 million shares in the last trading session. 

Vanguard Growth ETF VUG

This fund, with total net assets worth $203.5 billion, offers exposure to 151 large-capitalization companies in the U.S. stock market. NVDA holds the top spot in this fund, with 13.22% weightage. AAPL and MSFT hold the second and third positions in this fund, with 11.49% and 9.58% weightage, respectively. GEV (0.61%) holds the 20th position in VUG.

VUG has gained 8.4% over the past year. The fund charges 3 bps as fees. It currently sports a Zacks ETF Rank #1 and traded at a good volume of 1.22 million shares in the last trading session. 

State Street Technology Select Sector SPDR ETF XLK

This fund, with assets under management (AUM) worth $88.42 billion, offers exposure to 71 companies from technology hardware, storage and peripherals; software; communications equipment; semiconductors and semiconductor equipment; IT services; and electronic equipment, instruments and components industries. NVDA holds the top spot in this fund, with 15.33% weightage. AAPL and MSFT hold the second and third positions in this fund, with 13.11% and 9.94% weightage, respectively. 

XLK has soared 19.4% over the past year. The fund charges 8 bps as fees. It currently sports a Zacks ETF Rank #1. It traded at a good volume of 13.47 million shares in the last trading session.

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