Nvidia sees ‘significant’ influx of dollars from retail investors as traders flock to beloved AI

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 he wanted to play into the trend.

“Whenever you look at AI, it’s like all roads lead Nvidia” said MacGillivray, who has 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 poured into Nvidia by everyday investors this year, according to data from Vanda Research. This has made it the most bought equity by retail traders on the web in 2024, as of December 17.

Nvidia has seen nearly double the amount of net inflows from this group compared to the SPDR S&P 500 ETF Trust (SPY)which tracks the broad US stock benchmark. He is also about to dethrone Teslathe favorite of retail investors who won the the most purchased title in 2023. (The firm calculates net flows for each stock by subtracting its total outflows from its inflows.)

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

It’s the latest feather in the cap for Nvidia. The AI ​​titan has been wooing investors big and small for over a year. The chip maker admission obtained to the most appreciated Dow Jones Industrial Average last month and is by far the best performer of the 30-stock index in 2024.

Despite rocky negotiations in December, the “The Magnificent Seven” Shares are still up 180% to end 2024. That surge has boosted the stock to an elite group of market-cap companies that exceeds $3 trillion. Nvidia is now the second most valuable company in the USA

Naturally, this push for Nvidia stock has made the stock play a larger role in the average investor’s holdings. Vanda’s data shows that Nvidia has a weight of more than 10% in the typical mom-and-pop retailer’s portfolio, compared with just 5.5% at the start of 2024. It is now the second-largest share of the average retail investor, marginally behind Tesla. .

Additionally, Nvidia’s retail network entries in 2024 are more than 885% greater than the amount seen just three years earlier.

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

One such individual shareholder is social media marketer Genevieve Khoury. He started buying stocks in 2022 on the recommendation of his father, who works in the technology sector. Khoury plans to hang on to his stock until he can cash out the nest egg for a down payment on a home or other major purchase.

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

Inflows tended to increase 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 widest sale in the market.

Of course, the stock has seen inflows cool to some extent as they lost some steam. DA Davidson’s Luria noted that stocks were more expensive six months ago than in recent sessions.

While Nvidia continued to beat Wall Street’s profit expectations, it didn’t beat estimates enough to continue its rapid share price growth, Luria said. Now, he said the stock has reached more “balanced” and “reasonable” levels.

Despite this recent volatility, individual investors like Prajeet Tripathy remain bullish on the company’s leadership within AI and focus on innovation. “I think it’s just going to keep increasing exponentially,” said Tripathy, a recent college graduate.

While investing is largely a digital activity, market participants’ love for Nvidia has spilled over into the real world. Several gathered in New York City in late August to well–documented Watch party focused on Nvidia’s earnings report. This event occurred within a few months of the shares being in existence 10 to 1 divisiona move usually made to incentivize retail investors.

While Nvidia’s retail ownership is substantial, this factor has not boosted the price-to-earnings multiple in the same way that it has for Tesla and palantirsaid Lúria. Still, Morningstar equity strategist Brian Colello said Nvidia has “pretty significant” volatility for a stock of its size, which may underscore the role that retail traders can play in the ‘impulse of share prices.

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

2024 marks the second year in a row that a single stock has eclipsed the SPDR S&P 500 ETF Trust in net flows. However, the strong inflows into the ETF may ease any concerns that investors are abandoning broad index funds considered safe investments, according to Iachini. The past two years of high flows in megacap tech names may reflect traders chasing ongoing bull marketIachini said.

Despite the strong returns, Iachini said, Nvidia may be a surprising choice for the typical home investor. Despite Nvidia CEO Jensen Huang’s signature leather jacket, the company lacks a “God-like” personality that might attract the attention of retail investors, Iachini said. For example, he noted Tesla CEO Elon Musk, who made waves this year for his public support of President-elect Donald Trump during the campaign.

Looking ahead, Palantir gained traction with the retail crowd in the fourth quarter and could be a favorite in the new year, Iachini said. The software stock has been the ninth most bought stock on balance sheet in 2024, surpassing AmazonAlphabet and Microsoft, according to Vanda data.

Alex Karp, CEO of Palantir grateful to small-scale investors during a video posted Sunday against a snow-covered backdrop. “So grateful to all the individual investors who took the time and the opportunity, and had the courage to look beyond the conventional, rusty, creaky communities,” Karp said in the clip, while wearing reflective glasses and clutching walking sticks of skiing

Fittingly, Palantir was a recent pickup from Khoury, the California-based social media vendor, on the advice of a friend. Khoury is hoping for a similar career at Nvidia, so she can retain bragging rights with acquaintances who think they know more about investing than she does. So far so good: the stock has soared nearly 380% in 2024, making it the best performer of S&P 500 until the year

“Multiple times in college, people would try to talk to me about it like I didn’t know what I was talking about,” said Khoury, who graduated this year with a 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.”