Nasdaq NVDA Nvidia

The blockchain technology and crypto-themed Global X Blockchain ETF ( NASDAQ:BKCH) has taken advantage of a red-hot crypto market to soar to a scintillating gain of 188.3% year-to-date. BKCH points out that the value of the crypto market could grow by over 10x to $1.4 trillion by the end of the decade, so we could still be in the early innings of the growth of crypto and blockchain technology. But while the crypto market is indeed exciting, there are several risk factors that investors should give consideration to before rushing into BKCH to join the party.  What Does the BKCH ETF Do? BKCH is a relatively small ETF from Global X (with $107.3 million in assets under management) that invests in companies that are involved in cryptocurrency and blockchain technology.   One nice thing about BKCH is that it is one of the rare crypto-themed ETFs that pays a dividend, although it currently yields just 0.6%.  Concentrated Holdings With just 25 holdings, BKCH is not particularly diversified. Additionally, BKCH’s top 10 holdings make up 75.8% of assets, making it even less diversified. Below, you’ll find an overview of BKCH’s top 10 holdings using TipRanks’ holdings tool.  Top holding Coinbase Global ( NASDAQ:COIN ) has a large weighting of 13.5%, while Bitcoin ( BTC-USD ) miners Marathon Digital ( NASDAQ:MARA ), Riot Platforms ( NASDAQ:RIOT ), and Hut 8 Mining ( NASDAQ:HUT ) all have double-digit weightings as well, making this a very concentrated fund with large exposure to a few names. In fact, a whopping nine of BKCH’s top 10 holdings are Bitcoin miners. This can be great when the price of Bitcoin is surging, but it leaves investors exposed to plenty of volatility and risk to the downside when Bitcoin is slumping.  BKCH touts the fact that "this theme is bigger than cryptocurrency" because of the promise of blockchain technology itself, but it's hard to see that in the way that the fund is configured. After the deluge of miners, the stock does own some companies that participate in blockchain technology and the crypto industry in other ways. For example, Nvidia ( NASDAQ:NVDA ) supplies the GPUs (graphic processing units) that the Bitcoin miners mentioned above utilize to process transactions and secure the Bitcoin network. Block ( NYSE:SQ ) has made Bitcoin accessible to millions of investors by enabling them to buy, sell and hold it directly in its popular CashApp payment service. However, NVDA and SQ have smaller weightings of 2% and 1.5%, respectively, that pale in comparison to the weightings of the Bitcoin miners listed above. In fairness to BKCH, while I’m concerned about its heavy concentration in Bitcoin miners, TipRanks’ Smart Score system views its holdings favorably. The Smart Score is a proprietary quantitative stock scoring system created by TipRanks. It gives stocks a score from 1 to 10 based on eight market key factors. A score of 8 or above is equivalent to an Outperform rating, and an impressive eight out of BKCH’s top 10 holdings boast outperform-equivalent Smart Scores of 8 or better. So, while I have some concerns about the fund’s heavy concentration in a cohort of very similar companies, the Smart Score views these companies favorably on an individual level. As a whole, BKCH has a Neutral Smart Score of 7, although this is at the higher end of Neutral. As you’ll see below, sell-side analysts also have a relatively favorable view of BKCH.  Is BKCH Stock a Buy, According to Analysts? Turning to Wall Street, BKCH has a Moderate Buy consensus rating, as 72.13% of analyst ratings are Buys, 21.86% are Holds, and 6.01% are Sells. At $40.97, the average BKCH stock price target implies 6.4% upside potential. BKCH's Fees At 0.5%, BKCH’s expense ratio isn’t great. In the broader landscape of all ETFs, it is expensive compared to the many index funds that now feature expense ratios of 0.1% or lower. However, in the smaller world of crypto ETFs, its expense ratio is actually more cost-effective than those of many of its competitors. Its fees are equivalent to those of the VanEck Digital Transformation ETF ( NASDAQ:DAPP) , and they are cheaper than those of other names in the space, like the Amplify Transformational Data Sharing ETF ( NYSEARCA:BLOK) and the Bitwise Crypto Industry Innovators ETF ( NYSEARCA:BITQ) , which charge fairly exorbitant fees of 0.75% and 0.85%, respectively.    Ultimately, BKCH's expense ratio means that an investor putting $10,000 into the ETF today will pay $50 in fees in year one. Over time, these fees would compound. Assuming the 0.50% expense ratio remains in place and that the fund returns 5% per annum, this same BKCH investor would pay $628 in fees over the course of 10 years, which is a fairly steep price to pay. An Underwhelming Track Record Launched in December of 2021, BKCH hasn’t been around for long enough to compile much of a performance track record, but unfortunately for its investors, it has lost 43.6% on a total-return basis since inception, which isn’t much to write home about. It should be noted that the fund launched at the height of exuberance surrounding the crypto bull market in late 2021 and early 2022 before the entire crypto market headed much lower over the course of the year. This has obviously impacted BKCH's results, but it has to be said that this is still a pretty disappointing performance at the end of the day.  The Takeaway Overall, BKCH has some good things going for it, including the strong Smart Scores for its holdings and its relatively bullish rating from analysts. Ultimately, though, the fund’s underwhelming track record, high fees, lack of diversification, and heavy concentration toward Coinbase and the Bitcoin miners it owns make it a pass for me. Investors who are intrigued by this ETF’s theme could, for example, buy Coinbase and one or two of the larger Bitcoin miners like Marathon Digital or Riot Platforms and achieve similar exposure without the fee. Conversely, an investor could also simply buy Bitcoin and perhaps Ethereum ( ETH-USD ) and gain exposure to the underlying assets that will ultimately drive this entire space in one direction or another. Disclosure

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AI, artificial intelligence, has come into its own in recent years. Machine learning technology has found its way into a wide range of day-to-day activities, from internet searching to marketing and advertising to just driving down the highway. Artificial intelligence promises to change the way that we interact with the world and with computers, and the launch of 'generative AI,' embodied in real-language chatbots like ChatGPT, shows just how close that promise is. The emergence of any new technology brings with it an ever-proliferating array of opportunities, and AI is no exception. Tech firms all around the world are neck-deep in AI, from making the semiconductor chips that power the technology to developing the software that will interface between AI and us – to creating the new technologies that will build on machine learning. While tech companies at all scales are gravitating to AI, the larger tech firms have a leg up. They’re huge to begin with, some with trillion-dollar market caps; they are already industry leaders – and they’ve been involved in AI from the beginning. The giant tech titans have been leading the market gains we’ve seen so far this year, making those gains partly on AI. Market-leading positions and connections to a world-changing technology have helped put some of the tech giants on the Smart Score's 'Perfect 10' list. The Smart Score uses machine learning as well, to gather and collate the data behind thousands of publicly traded equities and assigns those stocks a simple score pointing toward likely future performance, based on 8 data-based factors. Considering all of this, the 'Perfect 10' tech titans are a logical place to look for riding the market on the way to new highs. Let’s take a closer look at two of them. Nvidia Corporation ( NVDA ) The first stock on our list of ‘Perfect 10s’ is Nvidia, one of the world’s leading semiconductor chip firms. Nvidia built its reputation on the strength of its graphics processing units, GPUs, chips designed to run advanced graphics programs and beloved by both professional graphic designers and high-level gamers. This niche nicely preadapted Nvidia for the advent of AI, as the company’s GPUs are also capable of handling the high processing demands of AI computing. Demand for AI-capable chips has been booming all year, and Nvidia has realized strong gains as a direct result – the stock is up over 226% year-to-date. It’s no surprise that Nvidia is a major supplier of GPU chips for OpenAI, the company that launched ChatGPT last November. OpenAI has been using Nvidia’s chips in its machine learning applications – ‘teaching’ its AI – since 2020, and has already indicated a need for another 10,000 chips to maintain ChatGPT going forward. This can only bode well for Nvidia, which is already one of the select few $1 trillion-plus companies in the stock market. The rapid expansion of AI has led to solid beats compared to the financial expectations in Nvidia’s last financial release. In the company’s last quarterly report, for Q1 of fiscal year 2024, it showed total revenues of $7.19 billion, a total that was down 13% year-over-year but was also $669 million above the forecasts. The company’s earnings were also higher than had been anticipated; at $1.09 per share, the non-GAAP EPS beat the forecast by 17 cents per share. The company finished its fiscal Q1 with over $5 billion in cash and other liquid assets on hand, compared to $3.9 billion in in the prior year quarter. Investors were also mightily impressed by Nvidia’s forward guidance. The chip maker is guiding toward $11 billion in fiscal Q2 sales, far above the $7.11 billion consensus figure. Hitting that guidance will equate to a 41% y/y revenue gain. All of this – but especially the company’s strong link to AI and its ability to generate cash – brought Nvidia to the attention of 5-star analyst Chris Caso, from Wolfe Research. Caso writes of Nvidia’s attraction for investors, “There is now little investor debate about NVDA’s dominance of AI, or the potential growth rates. The main question is whether there is still room for the stock to move further, given the big move and elevated valuation - we think there is given NVDA’s strong FCF. We think it’s unprecedented to have a company growing this fast (30% 8-year CAGR, 35% 3-year CAGR), and still throw off this much cash (~2.2% FCF yield even after >200% YTD stock gain). That cash flow, coupled with NVDA’s dominant position in AI, keep us in the stock despite the move.” Caso gives NVDA an Outperform (Buy) rating, and his price target, set at $570, implies the stock will gain another 22% in the year ahead. (To watch Caso’s track record, click here .) The giant tech firms pick up plenty of reviews from Wall Street, and Nvidia has 32 recent calls on file – including 30 to Buy and 2 to Hold, for a Strong Buy consensus rating. The shares are priced at $467.5, and the stock’s $504.46 average price target suggests a 12-month appreciation of 8%. (See Nvidia’s stock forecast.) Alphabet, Inc. ( GOOGL ) The second AI-related stock on today’s list is Alphabet, the parent of Google and an array of other subsidiaries – many of which are tied directly into AI. For Google, of course, the connection is obvious – Google has been the dominant player in internet search for decades, and for much of that time has been using AI-powered algorithms to enhance its search modes. Google also uses AI in its digital advertising applications, which are the go-to for online marketing companies. Alphabet’s other AI-related enterprises cover a range of niches, including AI research (DeepMind), drone-based local air-freight delivery (Wing), autonomous vehicles (Waymo), and YouTube, the web’s premier video search engine. Alphabet is also advancing its head-to-head competitor to ChatGPT, an AI chatbot called Bard. While Alphabet does not have a leading position in every AI niche, it’s a strong competitor – and the company’s long history with AI development gives it an edge in creating workable systems quickly. All of this has powered Alphabet’s growth. Its attraction for investors has supported the stock price – and pushed the market cap up to $1.63 trillion, the third-highest among publicly traded firms. The stock has also obviously benefited from strong financial results, such as those on display in the recent Q2 readout, which beat the forecasts all around. Top line revenues at $74.6 billion, beat expectations by $1.84 billion and grew 7% year-over-year, while the bottom-line EPS, at $1.44, was 10 cents per share over the estimates. For Truist analyst Youssef Squali, Alphabet’s AI connection, amongst other elements, informs his bullish take. Explaining his stance, the 5-star analyst writes, “We remain constructive on GOOGL following stronger than expected 2Q23 results, reflecting faster recovery for Search and YT, and sustained momentum in Cloud as mgmt reigns in costs and focuses investments on the highest growth priorities. We expect to see further growth acceleration in 2H23 with margins improving, supporting a compelling case for the stock N/M term. LT, while questions about AI's impact on Search advertising remain, we believe that GOOGL is at the forefront of this race and expect mgmt to continue to lean in, more assertive in the rollout of its AI initiatives and in how it communicates them.” Squali goes on to rate the stock as a Buy, with a $160 price target pointing toward 21% share gains over the next 12 months. (To watch Squali’s track record, click here .) There are 35 recent analyst reviews of Alphabet on file and they break down 30 to 5 favoring Buys over Holds, for a Strong Buy consensus rating. The shares have a current trading price of $132.58 with an average price target of $149.45, indicating a 13% one-year gain. (See Alphabet’s stock forecast.) To find good ideas for stocks trading at attractive valuations, visit TipRanks’  Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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