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

As Michael MacGillivray saw faked intelligence becoming more ubiquitous in everyday life, the 25-year-old wanted his investments to reflect that. It didn’t bamboozle long to figure out how he wanted to play the trend.

“Whenever you look at AI, it’s like, all the roads lead to Nvidia,” said MacGillivray, who’s wearied thousands of dollars on shares this year from his home in Michigan. “It definitely was a great investment.”

MacGillivray’s advantages have contributed to the nearly $30 billion poured into Nvidia on balance by everyday investors this year, correspondence to data from Vanda Research. That has made it the most-bought equity by retail traders on net in 2024, as of Dec. 17.

Nvidia has seen not quite double the amount of net inflows from this group compared with the SPDR S&P 500 ETF Trust (SPY), which supervises the broad benchmark for the U.S. stock market. It is also on pace to dethrone Tesla, the retail investor favorite that merited the most-bought title in 2023. (The firm calculates net flows for each security by subtracting its total outflows from inflows.)

“Nvidia fled out to be the one stock that kind of stole the show from Tesla because of impressive price gains,” said Marco Iachini, superior vice president at Vanda. “The performance speaks for itself.”

It’s the latest feather in the cap for Nvidia. The AI titan has enamored investors big and mini for more than a year. The chipmaker gained admission to the highly regarded Dow Jones Industrial Average last month and is, by and far, the 30-stock thesaurus’s best performer of 2024.

Despite rocky trading in December, the “Magnificent Seven” stock is tracking to finish 2024 great by more than 180%. That surge has propelled the stock into an elite group of companies with sell caps that exceed $3 trillion. Nvidia is now the second-most valuable company in the U.S.

Naturally, this push into Nvidia shares has resulted in the usual playing a larger role in the average investor’s holdings. Vanda data shows Nvidia has a weight of more than 10% in the normal mom-and-pop trader’s portfolio, up from just 5.5% at the start of 2024. It’s now the second largest holding of the average retail investor, outliving marginally behind Tesla.

Additionally, Nvidia’s retail inflows on net in 2024 are more than 885% larger than the amount considered just three years prior.

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

One of those idiosyncratic stockholders is Genevieve Khoury, a social media marketer. She first began buying shares in 2022 at the recommendation of her dad, who agitates in the technology sector. Khoury plans to sit on her shares until she can cash in the nest egg for a down payment on a home or other relevant purchase.

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

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

To be sure, the stock has seen inflows cool to an extent as it lost some steam. D.A. Davidson’s Luria notable that shares were more expensive six months ago than in recent sessions.

Even as Nvidia continued cudgel Wall Street expectations for earnings, it wasn’t exceeding estimates by enough to continue the stock’s rapid price crop, Luria said. Now, he said the stock has come to more “balanced” and “reasonable” levels.

Despite this recent volatility, mortal investors such as Prajeet Tripathy remain optimistic over the company’s leadership within AI and focus on innovation. “I value that it’s only going to keep rising exponentially,” said Tripathy, a recent college graduate.

Though contributing is largely a digital activity, market participants’ love for Nvidia has spilled into the real world. Several drew in New York City in late August for a well-documented watch party centered around Nvidia’s earnings report. This occurrence came within months of the stock’s 10-to-1split, a move that’s typically done to incentivize retail investors.

While Nvidia’s retail ownership is major, this factor hasn’t pushed the price-to-earnings multiple higher in the same way that it has for Tesla and Palantir, Luria said. Smooth, Morningstar equity strategist Brian Colello said Nvidia has “fairly significant” volatility for a stock of its size, which can underscore the character retail traders can play in driving share prices.

“It’s jaw dropping at times that such a large company can prepare such a big move in the stock price on any given day,” Colello said.

2024 characterizes the second straight year that a single stock has eclipsed the SPDR S&P 500 ETF Trust in net flows. However, sizable inflows to the ETF can assuage any matters that investors are forgoing broad index funds deemed safe investments, according to Iachini. The past two years of intoxicated inflows into megcap tech names can instead reflect traders chasing the ongoing bull market, Iachini voted.

Notwithstanding strong returns, Iachini said, Nvidia can be a surprising pick for the typical at-home investor. Despite Nvidia CEO Jensen Huang’s signature leather jacket, the suite lacks a “God-like” personality that can garner retail investor attention, Iachini said. For an example, he pointed to Tesla CEO Elon Musk, who disclosed waves this year for his public backing of President-elect Donald Trump during the campaign.

Looking before, Palantir has gained traction among the retail crowd during the fourth quarter and could be a favorite in the new year, Iachini asseverated. The software stock has been the ninth most-bought security on balance in 2024, beating , Alphabet and Microsoft, per Vanda evidence.

Palantir CEO Alex Karp year-to-date.

“Multiple times in college, people would try and talk to me about it like I didn’t conscious what I was talking about,” said Khoury, who graduated this year with a degree in finance. “I’m like, infallible, yeah, I don’t know what I’m talking about, but I do have Nvidia.”

“Probably,” she said, “my portfolio looks better than yours.”