Nvidia’s
exponential growth and positive financial forecasts have propelled its stock to yet another new high, making the S&P 500 ever more reliant on the fate of a single semiconductor manufacturer.
After jumping 16% on Thursday, Nvidia edged up another 0.4% in Friday trading to close at $788.17 a share. The recent gains have pushed its year-to-date growth to 59%, lifting the chipmaker’s market capitalization by $747 billion. The share price had already tripled in 2023.
That means 28% of the
S&P 500’s
gains—nearly $2.7 trillion year to date—came from just one stock.
Meta Platforms
accounted for 12%, followed by
Microsoft
and
Amazon.com
with 10% and 9%, respectively.
Those four stocks combined are responsible for 60% of the S&P 500’s gains in 2024, while the rest of the so-called Magnificent Seven stocks seem to have lost their mojo.
Tesla
shares have lost 23% of their value this year, while
Apple
has declined 5%.
Alphabet
has gained just 3%.
Thursday’s surge has once again pushed Nvidia’s market cap above Amazon’s and Alphabet’s, making it the third-most valuable stock in the U.S. The chip maker took the spot for the first time on Feb. 14.
Nvidia’s market cap is now just below $2 trillion, or nearly 5% of the S&P 500 index, behind Microsoft’s $3 trillion and Apple’s $2.8 trillion.
The stock has been on a tear over the past year, ballooning more than five times in size. At the beginning of 2023, Nvidia had a market cap of $360 billion, which meant it was roughly 17% of the size of Apple, the most valuable stock of the time. It accounted for 1% of the S&P 500 index.
Since the beginning of 2023, the S&P 500 has added $10.6 trillion to its market value, and 15% of that came from Nvidia.
Despite Nvidia stock’s gains, its valuation doesn’t seem lofty relative to some other big tech companies. The chips that Nvidia makes are critical for artificial intelligence, and the company is well positioned to benefit from the surging demand.
CEO Jensen Huang said on Wednesday that the new wave of investment driven by generative AI would double the amount of data centers in the next five years. “A whole new industry is being formed, and that’s driving our growth,” he said on the company’s earnings call.
In the quarter ended in January, revenue rose by 265% from a year earlier to $22.1 billion, while revenue in the data-center business increased more than fivefold to $18.4 billion.
For fiscal 2025, the year ending next January, analysts expect Nvidia to deliver earnings of $24.6 a share, nearly double the result from the previous year and seven times the figure in fiscal 2023. The stock is currently trading at 32 times forward earnings, ahead of Apple, Meta, and Alphabet, but cheaper than Microsoft, Amazon, and Tesla.
Write to Evie Liu at [email protected]
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