Nvidia sees ‘notable’ influx of retail investor dollars as traders flock to AI darling

When Michael MacGillivray saw artificial intelligence becoming more ubiquitous in everyday life, the 25-year-old wanted his investments to reflect that. It didn’t take long to figure out how I wanted to follow the trend.

“Every time you look at AI, it’s like all roads lead to NVIDIA“said MacGillivray, who spent thousands of dollars on stocks this year from his home in Michigan. “It was definitely a great investment.”

MacGillivray’s purchases have contributed to the nearly $30 billion invested in Nvidia by mainstream investors this year, according to data from Vanda Research. This made it the most bought stock by retail traders on a net basis in 2024, as of December 17.

Nvidia has seen almost double the net inflows from this group compared to the SPDR S&P 500 ETF Trust (SPY)which tracks the broad US stock market benchmark. It is also on track to dethrone teslathe favorite of retail investors that obtained the Most purchased title in 2023. (The company calculates net flows for each security by subtracting its total outflows from its inflows.)

“Nvidia turned out to be the only stock that stole the show from Tesla due to impressive price gains,” said Marco Iachini, senior vice president at Vanda. “The performance speaks for itself.”

It’s the latest feather in Nvidia’s cap. The AI ​​titan has enchanted investors large and small for more than a year. the chip maker got admission to the highly respected Dow Jones Industrial Average last month and is by far the best-performing 30-stock index in 2024.

Despite unstable trade in December, the “Magnificent Seven” Shares are on track to finish 2024 up more than 180%. That rise has propelled stocks into an elite group of companies with market capitalizations that exceed 3 billion dollars. Nvidia is now the second most valuable company in the united states

Naturally, this push toward Nvidia stock has resulted in the stock playing a larger role in the average investor’s holdings. Vanda data shows that Nvidia has a more than 10% weight in the typical family merchant’s portfolio, up from just 5.5% in early 2024. It is now the second-largest share of the average retail investor, ranking marginally behind Tesla. .

Additionally, Nvidia’s retail net receipts in 2024 are more than 885% higher than the amount seen just three years earlier.

“Nvidia really stands out in terms of how quickly retail investors became such an important part of the ownership,” said Gil Luria, head of technology research at DA Davidson, an investment bank. “The rise was remarkable.”

One of those individual shareholders is Genevieve Khoury, a social media marketing specialist. He first started buying stocks in 2022 on the recommendation of his father, who works in the technology sector. Khoury plans to hold on to his shares until he can cash in the savings for a down payment on a house or other major purchase.

“It just kept going up and up,” the Los Angeles-area resident said. “I’m just holding it.”

Entries tended to spike this year around Nvidia’s earnings reports, according to Vanda’s Iachini. Retail investors also bought during a dip in early August, which coincided with a broader market sell-off.

The stock has certainly seen inflows cool to some extent as it lost some steam. DA Davidson’s Luria noted that stocks were more expensive six months ago than in recent sessions.

Although Nvidia continued to beat Wall Street’s earnings expectations, it didn’t beat estimates enough to continue the rapid growth in stock prices, Luria said. Now, he said, stocks have reached more “balanced” and “reasonable” levels.

Despite this recent volatility, individual investors like Prajeet Tripathy remain optimistic about the company’s leadership within AI and are focused on innovation. “I think it will continue to increase exponentially,” said Tripathy, a recent college graduate.

Although investing is largely a digital activity, market participants’ love for Nvidia has extended to the real world. Several gathered in New York City in late August for a Well–documented watch party focused on Nvidia’s earnings report. This event occurred a few months after the stock crash. 10 to 1 splita measure that is normally done to encourage retail investors.

While Nvidia’s retail ownership is substantial, this factor has not lifted the price-earnings multiple in the same way it has for Tesla and PalantirLuria said. Still, Morningstar equity strategist Brian Colello said Nvidia has “pretty significant” volatility for a stock its size, which may underline the role retail traders can play in driving stock prices. actions.

“Sometimes it’s surprising that such a large company can have such a big move in stock price on any given day,” Colello said.

2024 marks the second consecutive year that a single stock has eclipsed the SPDR S&P 500 ETF Trust in net flows. However, the sizable inflows to the ETF may allay any concerns that investors are giving up on broad index funds considered safe investments, according to Iachini. The last two years of high inflows into mega-cap tech names may instead reflect traders chasing bull market underwayIachini said.

Despite the strong returns, Iachini said, Nvidia may be a surprising choice for the typical home investor. Despite Nvidia CEO Jensen Huang’s trademark leather jacket, the company lacks a “godlike” personality that could attract the attention of retail investors, Iachini said. As an example, he pointed to Tesla CEO Elon Musk, who made a splash this year for his public support of President-elect Donald Trump during the campaign.

Looking ahead, Palantir has gained traction among the retail sector during the fourth quarter and could be a favorite in the new year, Iachini said. The software stock has been the ninth most purchased stock overall in 2024, surpassing AmazonAlphabet and Microsoft, according to data from Vanda.

Alex Karp, CEO of Palantir thanked small investors during a video posted Sunday with a snow-covered background. “Very grateful to all the individual investors who took the time and the opportunity, and had the courage to look beyond the conventional, rusty, crusty platitudes,” Karp said in the clip, while sporting reflective goggles and clutching ski poles .

Fittingly, Palantir was a recent hire of Khoury, the California social media marketer, on the advice of a friend. Khoury hopes to achieve a career similar to that of Nvidia, so she can continue showing off to acquaintances who think they know more about investing than she does. So far it’s going well: the stock has soared nearly 380% in 2024, making it the best performer in the stock. S&P 500 Year to date.

“Several times in college, people would try to talk to me about this like I didn’t know what they were talking about,” said Khoury, who graduated this year with a bachelor’s degree in finance. “I’m like, sure, yeah, I don’t know what I’m talking about, but I have Nvidia.”

“Probably,” he said, “my wallet looks better than yours.”