It’s no secret that UK buyers have been shopping for Nvidia (NASDAQ: NVDA) inventory just lately. What’s attention-grabbing, nonetheless, is that Hargreaves Lansdown information reveals that a variety of buyers have been investing through a product referred to as the Leverage Shares PLC 3X Nvidia ETP or ‘3NVD’.

So, what’s this product all about? And is it a great way to purchase shares within the chip firm for my portfolio?

Leveraged publicity to Nvidia

The Leverage Shares PLC 3X Nvidia ETP is a London Inventory Alternate-listed exchange-traded product (ETP) that gives publicity to Nvidia inventory. Nonetheless, it doesn’t present normal publicity to the expansion inventory.

As an alternative, it gives 3 times the publicity to it. In different phrases, if Nvidia inventory was to rise by 1% in a day, this ETP ought to in idea rise by about 3%.

Excessive danger, excessive return

Now, the factor to grasp about leverage is that it will probably enlarge each beneficial properties and losses. So utilizing it may be very dangerous.

If Nvidia shares had been to fall by 5% in a day, this ETP would fall by about 15%. That’s a giant loss.

The potential for nasty losses was illustrated earlier this month when Nvidia skilled some volatility. When the corporate’s share price fell by virtually 10% on 3 September, the price of this ETP fell from $50.21 to $35.81. That represents a lack of roughly 29% – ouch!

It’s price noting that to interrupt even after a lack of 29% one would wish to generate a acquire of about 41%.

My ideas

Given the high-risk nature of this product, I gained’t be touching it any time quickly. For me, it’s far too dangerous.

That stated, I stay very bullish on Nvidia itself. Many individuals consider this inventory is in an AI bubble right this moment. I disagree.

In my opinion, it is a firm with substantial development potential because of its main place within the AI chip market. And I consider the shares are moderately valued at current.

For the yr ending 31 January 2026 (the following monetary yr), analysts anticipate Nvidia to generate earnings per share of $4.02 (I truly suppose earnings could also be means increased than this). That places the inventory on a forward-looking price-to-earnings (P/E) ratio of underneath 30.

On condition that income and earnings are projected to develop by over 40% subsequent yr, that a number of appears very reasonable to me.

We’re at the start of a brand new industrial revolution.

Nvidia CEO Jensen Huang

I’ll be shopping for extra shares quickly

In fact, there are many dangers right here.

Proper now, a lot of the expansion is coming from spending by the opposite ‘Magnificent 7’ firms. This yr, for instance, round 45% of Microsoft’s capital expenditure goes to Nvidia.

If these firms had been to tug again on their AI spending, Nvidia’s development might gradual and the shares might fall.

One other danger is new AI chips from rivals. At current, most of the Magazine 7 firms are engaged on their very own chips.

On condition that AI is realistically nonetheless in its infancy, nonetheless, I see an extended development runway forward for Nvidia. And whereas it’s a big holding for me already, I plan to purchase a number of extra shares within the firm for my portfolio quickly.