Nvidia Corp’s (NASDAQ:NVDA) earnings and the Federal Reserve’s Jackson Hole meeting are setting up a potentially pivotal week for ETF investors, with one catalyst reinforcing the AI boom and the other testing whether markets can withstand higher-for-longer interest rates.
Nvidia Keeps AI ETFs in the Spotlight
Nvidia’s earnings are expected to provide another test of whether the AI spending boom has further to run.
"The supply/demand environment for AI computing infrastructure remains extremely tight," said John Belton, portfolio manager at Gabelli Funds, who expects Nvidia to deliver another beat against guidance.
Belton pointed to rising demand for cloud-based computing, noting that Nvidia A100 rental prices at major public clouds have risen about 15% over the past three months and 20% since the start of the year.
That backdrop keeps semiconductor ETFs firmly in focus. The iShares Semiconductor ETF (NASDAQ:SOXX) offers one of the most direct diversified ways to play the chip cycle, while the VanEck Semiconductor ETF (NASDAQ:SMH) provides another concentrated basket of semiconductor leaders.
The opportunity is increasingly expanding beyond chips. Laffer Tengler CEO and CIO Nancy Tengler called Nvidia a long-term holding and said "demand appears insatiable," while pointing to the company’s efforts to mobilize $500 billion in third-party capital for AI infrastructure.
She also highlighted Amazon and Eaton as "pick and shovel" beneficiaries of the AI buildout, suggesting investors could look beyond pure-play semiconductor ETFs toward broader infrastructure funds.
Jackson Hole raises the rate-risk question
The other half of the equation is interest rates.
Catalyst Funds senior portfolio manager Larry Holzenthaler described this year’s Jackson Hole gathering as "one of the more meaningful Jackson Hole gatherings in some time," citing persistent inflation, large deficits and uncertainty around the Fed’s policy direction.
“It’s really an interesting storyline: to name a few dynamics playing out, inflation is still running above the Fed’s target, deficits are becoming a renewed focus, you have a new Fed chair that the market fears is biased toward lowering rates, you have quite a high dissent rate at the Fed recently, and Warsh’s last comments were not well received by the market. He called Jackson Hole a "blank piece of paper." Investors are going to be anxious to see what’s on the paper,” said Holzenthaler.
His message for bond investors is straightforward: "Investors just need to position around the mentality that rates are going to be higher than most people have been used to post the GFC."
That creates a potential advantage for floating-rate and short-duration ETFs over long-duration Treasury funds.
Holzenthaler said "staying shorter on the curve" makes sense and highlighted floating-rate assets and credit as ways to sidestep some of the volatility hitting longer-duration bonds.
ETFs Positioned for Higher-For-Longer Rate Regime
- SPDR Blackstone Senior Loan ETF (NYSE:SRLN) — Strong fit for the floating-rate/credit angle; senior loans have relatively low duration because their coupons reset periodically.
- Invesco Senior Loan ETF (NYSE:BKLN) — Another large, liquid floating-rate loan ETF that fits the higher-for-longer thesis.
- iShares Floating Rate Bond ETF (NYSE:FLOT) — Better suited if you want to emphasize floating-rate corporate bonds rather than leveraged loans.
- iShares 1-5 Year Investment Grade Corporate Bond ETF (NASDAQ:IGSB) — Useful for the short-duration corporate-credit angle.
- Vanguard Short-Term Corporate Bond ETF (NASDAQ:VCSH) — A straightforward short-duration alternative with investment-grade corporate exposure.
The ETF takeaway
That sets up a two-speed ETF trade: semiconductor and infrastructure ETFs for investors betting that AI capital spending remains powerful, and floating-rate or short-duration credit ETFs for those prioritizing income and reduced duration risk.
The key question is whether Nvidia’s AI boom can remain strong enough to offset the valuation and rate pressures created by a higher-for-longer macro backdrop.
Photo: Samuel Boivin / Shutterstock
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