So, Nvidia did it again. Another quarter of absolutely bonkers numbers that make you wonder if there's any ceiling to this AI thing. Revenue up 73%? Data center sales jumping 75%? Sure, that's the headline-grabbing stuff that reinforces Nvidia Corp (NVDA) as the undisputed king of the AI chip trade. But if you're looking at the ETF landscape, the real story might be buried a bit deeper in the report: networking revenue growth of 263%.

Think about that for a second. 263%. That's not just selling more graphics processing units (GPUs). That's a clear signal that building out AI infrastructure is becoming a much bigger, more complex project. It's no longer just about the brains of the operation; it's about the nervous system—the high-speed connections that let all those powerful chips talk to each other. This is the part where the story starts to widen for investors who aren't just betting on a single stock.

Jake Behan, Head of Capital Markets at Direxion, called the report "the quarterly reaffirmation of the health of the AI trade." He pointed out that few events have the sheer weight to potentially push something like the S&P 500 above the 7,000 level, and Nvidia's earnings are one of them. Why? Because the ripple effects are extensive. "[They] impact hyperscalers, semiconductor companies, struggling software names, the NDX, SPX, and the list goes on," Behan said.

ETFs in Focus: From Semiconductors to the Whole Tech Stack

Okay, so where does this leave ETF investors? The obvious first stop is still semiconductor funds. ETFs like the VanEck Semiconductor ETF (SMH) and the iShares Semiconductor ETF (SOXX) are direct beneficiaries when Nvidia crushes it. But that 263% networking surge is like a flashing sign pointing to a second-wave opportunity.

Sales of Nvidia's NVLink and Spectrum-X systems show that the spending spree is expanding. Companies aren't just buying GPUs; they're buying the entire rack-scale architecture to make them work. This logically widens the lens for ETF investors. Suddenly, broader tech exposure starts to look more interesting. Think funds like the Invesco QQQ Trust (QQQ) or the iShares U.S. Technology ETF (IYW), which capture a larger slice of the tech ecosystem that's feeding and being fed by this AI build-out.

Ryan Lee, Senior Vice President of Product and Strategy at Direxion, highlighted that the market really needed to hear CEO Jensen Huang's statement that computing demand is "rising exponentially." The adoption of AI agents by businesses and the relentless spending from cloud giants (hyperscalers) are powerful tailwinds for the semiconductor sector.

But here's the interesting twist Lee noted: those same factors—massive capital expenditure and disruption—can be headwinds for other parts of the market, like traditional software companies. "The AI trade has transitioned from hype to scrutiny," Behan observed. Traders have heard the big spending forecasts; now they want proof that all that money is turning into real revenue. And Nvidia, he says, is now "the key metric for that shift."

It's worth noting that despite the blowout, expectations were sky-high. Options markets were only pricing in a relatively muted +/- 5.1% move for Nvidia's stock after earnings. According to Behan, that suggests a lot of optimism is already baked into the cake, given the enormous capex forecasts floating around. Yet, Nvidia is also trading at its lowest valuation multiples since mid-2020. So, you have a company beating sky-high expectations while also being cheaper than it has been in years. That's a combination that could add fuel to a market that's been a bit stalled lately.

Lee also pointed traders looking for leveraged exposure toward Direxion Daily NVDA Bull 2X Shares (NVDU) to magnify potential daily upside.

The Concentration Conundrum and the Broader Play

Of course, no story is perfect. Nvidia's earnings also highlight a significant concentration risk. More than 50% of its data center revenue came from hyperscalers. That's a lot of eggs in a very specific, albeit wealthy, basket.

Lee acknowledged this, noting, "Hyperscalers were over 50% of 4Q data center revenue, showing both the extreme level of capex from the hyperscalers and just how concentrated Nvidia's revenue can be." But he quickly added a dose of perspective: "That said, there are worse things than client concentration coming from companies with fortress balance sheets." The narrative around businesses adopting "agentic" AI suggests demand may slowly start to diversify away from being purely hyperscaler-driven.

This concentration is precisely why some investors might look beyond the obvious semiconductor plays. For a broader, more diversified approach, funds like QQQ come back into the picture. Or, for those worried about too much weight in the megacaps like Nvidia, equal-weight strategies could be appealing. An ETF like the Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE) is one way to get tech exposure while mitigating the risk of having too much riding on one or two superstar performers.

So, where does this leave us? Nvidia seems firmly in the driver's seat, controlling the economics of the AI trade for now. The bigger question for ETF investors is this: Was this just another impressive earnings beat that gets absorbed, or is it the spark that finally ignites the market's next sustained leg higher? The 263% networking growth suggests the story is still expanding, and that means the opportunities for ETF investors are expanding right along with it.