Nvidia sees ‘remarkable’ influx of retail investor dollars as traders gravitate to AI darling

As Michael McGillivray observed artificial intelligence becoming more ubiquitous in everyday life, the 25-year-old wanted his investments to reflect this. It didn’t take long to understand how he wanted to carry on with this trend.

“Whenever you look at AI, it’s like, all roads lead here NVIDIAsaid McGillivray, who has spent thousands of dollars on stocks this year from his home in Michigan. “It was definitely a great investment.”

McGillivray’s purchases bring nearly $30 billion to Nvidia by everyday investors this year, according to data from Wanda Research. This has made it the most bought equity on net by retail traders in 2024, as of December 17.

Nvidia saw almost double the amount of net flows compared to this group SPDR S&P 500 ETF Trust (SPY)Which tracks a broad benchmark for the US stock market. He is also on his way to step down from the throne TeslaA favorite of retail investors who made money Most purchased title of 2023. (The firm calculates the net inflow for each security by subtracting its total outflows from inflows.)

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

This is the latest achievement for Nvidia. The AI ​​titan has attracted investors large and small for more than a year. chip maker got admission For highly respected people Dow Jones Industrial Average The 30-stock index is the best performing index in the last month and so far, in 2024.

Despite fluctuating business in December “the magnificent Seven” The stock is on track to end 2024 with gains of more than 180%. That surge has put the stock among an elite group of companies with market cap over $3 trillionNvidia has also become second most valuable company in America

Naturally, this push into Nvidia shares has resulted in the stock playing a larger role in the average investor’s stake. Wanda data shows that Nvidia has a weighting of more than 10% in the typical mom-and-pop trader’s portfolio, up from just 5.5% at the start of 2024. It is now the second-largest holding of the average retail investor, just behind Tesla. ,

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

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

One of those individual stockholders is social media marketer Genevieve Khouri. He first started buying shares in 2022 on the recommendation of his father, who works in the technology sector. Khoury plans to sit on her shares until she can get the cash for a down payment on a home or other significant purchase.

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

According to Wanda’s Ichini, inflows increased this year around Nvidia’s earnings report. Retail investors also bought during the dip in early August, which coincides with Selling in the broader market.

To be sure, the stock has seen some flow cooling as some of its momentum has diminished. DA Davidson’s Luria said shares were more expensive in recent sessions than six months ago.

Luria said that even though Nvidia continued to beat Wall Street expectations on earnings, it did not exceed estimates enough to continue the stock’s rapid price rise. Now, he said the stock has come to a more “balanced” and “reasonable” level.

Despite this recent volatility, individual investors like Prajit Tripathi remain optimistic about the company’s leadership within AI and focus on innovation. “I think it’s going to continue to grow rapidly,” said Tripathi, a recent college graduate.

Although investing is largely a digital activity, market participants’ love for Nvidia has spread into the real world. Many people gathered in New York City in late August Well,documents The watch party focuses on Nvidia’s earnings report. This incident came within months of the stock 10-to-1splitA move that is typically done to encourage retail investors.

While Nvidia’s retail ownership is substantial, this factor has not pushed the price-to-earnings multiple up in the same way as it has for Tesla and Tesla. palantirLuria said. Still, Morningstar equity strategist Brian Colello said Nvidia has “fairly significant” volatility for a stock of its size, which could underline the role of retail traders in driving up share prices.

“Sometimes it’s surprising to see that the stock price of such a large company can change so drastically in any given day,” Colello said.

2024 marks the second consecutive year that a single stock has overtaken the SPDR S&P 500 ETF Trust in net inflows. However, according to Iachini, the massive flows into ETFs may offset any concerns that investors are abandoning broad index funds considered safe investments. The high inflows into megacap tech names over the past two years may instead reflect traders chasing ongoing bull marketIchini said.

Despite the strong returns, Iachini said, Nvidia may be a surprise pick for the typical domestic investor. Iachini said that despite Nvidia CEO Jensen Huang’s signature leather jacket, the company lacks the “god-like” personality that could attract the attention of retail investors. For example, he pointed to Tesla CEO Elon Musk, who has caused a stir this year for his public support Newly elected President Donald Trump during the campaign.

Looking to the future, Palantir gained popularity among the retail crowd during the fourth quarter and could be a favorite in the new year, Iachini said. Software Stock Has Been the Ninth Most Bought Security on Balance in 2024 AmazonAlphabet and Microsoft, according to Wanda data.

Palantir CEO Alex Karp Thanks to small scale investors During a video posted on Sunday which was set against a snow-covered backdrop. “I’m so grateful to all of you individual investors who took the time and the opportunity and had the courage to look beyond the traditional, rusty, worn-out things,” Karp said in the clip.

Largely, Palantir was a recent pickup from Khouri, a California social media marketer, on the advice of a friend. Khouri hopes to have Nvidia-like success so she can retain bragging rights with acquaintances who believe they know more than her about investing. It’s going well so far: The stock is up nearly 380% in 2024, making it the best performer. S&P 500 year to date.

“A lot of times in college, people would try to talk to me about it like I didn’t know what I was talking about,” Khoury said. “I’m sure, yes, I don’t know what I’m talking about, but I have Nvidia.”

“Maybe,” he said, “my portfolio looks better than yours.”