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Nvidia Dominates Retail Investment in 2024 Amid AI Boom

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Retail investors have propelled Nvidia to unprecedented heights in 2024, making it the most-bought equity of the year. With artificial intelligence becoming integral to daily life, individual traders have flocked to the chipmaker, seeing it as a key beneficiary of the AI revolution. This trend is exemplified by 25-year-old Michigan investor Michael MacGillivray, who has invested thousands of dollars in Nvidia shares this year, saying, “Whenever you look at AI, it’s like all roads lead to Nvidia.”

Data from Vanda Research indicates that everyday investors have poured nearly $30 billion into Nvidia in 2024, almost double the net inflows into the SPDR S&P 500 ETF Trust (SPY) and far surpassing Tesla, last year’s retail favorite. Nvidia’s meteoric stock rise—up more than 180% this year—has pushed its market capitalization past $3 trillion, making it the second-most valuable company in the U.S.

The stock now accounts for over 10% of the average retail investor’s portfolio, up from 5.5% at the start of the year. This represents an 885% increase in retail inflows compared to three years ago, underscoring Nvidia’s growing appeal among everyday traders. Investors like Genevieve Khoury, a social media marketer in Los Angeles, see Nvidia as a long-term play. Khoury, who started investing in 2022 based on her father’s advice, plans to use her gains for major purchases in the future, saying, “I’m just holding it.”

Retail enthusiasm for Nvidia has been particularly strong around earnings reports, with inflows spiking during those periods. While the stock’s rapid price growth has cooled recently, experts like D.A. Davidson’s Gil Luria believe Nvidia has reached more sustainable levels, maintaining its leadership in AI and innovation.

Nvidia’s popularity has extended beyond digital trading platforms, with events like a New York City watch party for its earnings report further showcasing its influence. However, some analysts note that Nvidia lacks the cult-like CEO figure—such as Elon Musk of Tesla—that often galvanizes retail investors.

Looking ahead, other companies like Palantir are gaining traction among individual traders. Palantir’s stock has risen nearly 380% in 2024, and its CEO Alex Karp has openly acknowledged the role of retail investors in the company’s success. Investors like Khoury are now diversifying into names like Palantir, hoping to replicate Nvidia’s phenomenal performance.

Despite its recent volatility, Nvidia remains a testament to retail investors’ growing influence in shaping market trends, solidifying its status as an AI powerhouse and an investment darling in 2024.

 

Dell and Palantir to Join S&P 500; Shares Surge

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Dell and Palantir both saw their shares jump about 7% in after-hours trading on Friday following the announcement from S&P Global that they will be added to the S&P 500 index. Palantir will replace American Airlines, while Dell will take the place of Etsy in the benchmark index.

This move marks Dell’s return to the S&P 500, having been a member from 1996 to 2013 before going private and rejoining the public market in 2018. For Palantir, which went public in 2020 after over 15 years as a venture-backed startup, this inclusion highlights its recent profitability and growing revenue. The company reported a net income of $135.6 million for the second quarter, a significant increase from the previous year.

The inclusion of these companies reflects their high market capitalizations—Palantir’s exceeds $67 billion, while Dell’s is over $72 billion—matching the median market cap of S&P 500 companies at approximately $33.5 billion. The addition often leads to a rally in stock prices as index-tracking funds adjust their portfolios to include the new members.

Dell’s stock had already surged 90% in 2023, driven by strong demand for AI servers. Meanwhile, Palantir, known for its data analytics and work with government and military agencies, has seen accelerated revenue growth and posted its first profits in late 2022.

The S&P 500 additions are intended to better represent U.S. stocks with high market caps. The inclusion of these companies follows recent changes, such as the addition of cybersecurity firm CrowdStrike in June. Shares of software maker Workday fell 2% in after-hours trading, despite earlier speculation about its potential inclusion in the index.