Nvidia posted record first-quarter earnings of more than NZ$136 billion — up 85 percent on a year ago. Because most New Zealand KiwiSaver funds have significant exposure to US equities, the average saver has a substantial indirect holding in one company whether they know it or not.
Nvidia reported record first-quarter earnings overnight, with revenue of more than NZ$136 billion — a figure 85 percent higher than the same quarter a year ago. The forecast for the next quarter is over NZ$153 billion. These are not incremental improvements; they reflect the scale of demand for AI computer chips from data centres, governments, and enterprises worldwide.
The numbers are large enough to matter well beyond Silicon Valley. Because most New Zealand KiwiSaver funds invest a portion of their portfolio in US equities, and because Nvidia has become one of the largest companies in the world, the average KiwiSaver saver has a material indirect holding in a single semiconductor company — whether they have made any choice to do so or not.
How Nvidia became a KiwiSaver story
KiwiSaver funds that have a growth or balanced investment option typically hold a portion of their portfolio in international shares. The US market represents around 65 percent of global equity markets by capitalisation, and the S&P 500 index — the most common benchmark for US exposure — has Nvidia at between 5 and 10 percent of the index depending on how the index is calculated. That means if a KiwiSaver fund replicates even a passive S&P 500 exposure, it is holding a very significant weight in a single company.
Craigs Investment Partners director Mark Lister noted that most KiwiSaver funds will be exposed to Nvidia through their shares component, even if the saver has never heard of the company.
What the results show
Nvidia beat estimates on revenue, guidance, data centre earnings, and margins. The headline result was strong. The market had, however, already priced in a strong result — and the initial share price reaction was relatively flat. The more meaningful signal for investors will come from anything new in the CEO's investor conference call.
The longer-term question is whether the price momentum can continue to be supported by genuine fundamental growth in earnings. Lister's assessment was that it has been, to date, but noted there are open questions around geopolitics, the ability to continue supplying chips to China, and increasing competition from companies like Alphabet and Amazon that are developing their own AI chips.
What this means for KiwiSaver members
The practical point is structural rather than advisory. KiwiSaver members with growth-oriented funds are exposed to the performance of large US technology companies through the mechanism of their fund's international allocation. That exposure is not optional — it is a function of how the funds are constructed. When Nvidia has a strong quarter, it supports the returns of the funds that hold it. When it does not, it acts as a drag.
The more complex question for fund members is whether the concentration risk in a small number of very large companies is appropriately priced — and that is a question the funds themselves and their managers are better placed to answer than a general article can.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.