Take that, Apple and Tesla. Nvidia may be the new favorite stock of regular people.
Many people are excited about AI, which has helped Nvidia NVDA, +0.86%’s share price grow a lot since the beginning of the year. Nvidia makes hardware and software that helps train and build AI models, so the company is in a great position to cash in on the AI craze. And the most recent earnings call from the company showed that it was doing just that.
Nvidia said on its earnings call on Wednesday that it had done even better than expected. Its Q1 sales were up 262% year-over-year to $26 billion, and its earnings per share were up 461% to $6.12.
The stock went up more than 7% from the last close to $1020.28 at Thursday’s open because of this news.
The average individual investor now has more shares of Nvidia than any other company, even before the company announced its earnings beat.
Vanda Research, a company that does research on investments, ranked the 15 stocks and ETFs that most people hold and how much they are worth. When it came to retail portfolios, Nvidia came out on top with 9.3%. It beat out popular stocks like AAPL, +1.87%, SPY, TSLA, +2.86%, QQQ, and META, +2.22%.
Several interesting facts can be found in the chart above. Another year ago, Apple (12.3%), SPY (12.3%), and Tesla (6.2%), on the other hand, made up much bigger parts of the average retail trading portfolio than Nvidia (4.2%). When 2024 began, Nvidia’s weight had grown to 5.5%, but it was still less than those three stocks.
Nvidia passed the others in just a few months thanks to its fast share price growth (205.2% in one year).
Vanda also says that over the past year, $13.787 billion worth of retail net buys went to Nvidia. The amount of money that wasn’t invested in Tesla and ETFs like SPY and QQQ is bigger than that number. However, Tesla was the worst-performing asset of the bunch.
Also, Vanda’s data was based on prices on May 21, so it doesn’t take into account how much Nvidia’s stock has grown since it report its latest earnings. Because NVDA is a big part of most retail investors’ portfolios, the company’s earnings beat will be good for them. Vanda research also says that individual investors are currently doing better than the S&P 500 index. This is because regular people like investing in technology stocks.
Will regular investors keep falling in love with Nvidia? There are several things that could change this.
JP Morgan data showed that retail was a net seller before the recent earnings, even though they bought $13.787 billion worth of goods over the past year. JPM has also seen a steady drop in the number of stores that participate in Nvidia since 2023.
The good news is that Vanda says small investors are still optimistic about Nvidia. On top of that, Nvidia said during its earnings call that it would split the shares 10 to 1. According to common belief, stock splits bring in small investors because the lower share prices make it easier for them to get in. Cboe data showed that this was true for mega cap stocks. It’s clear that Nvidia is a mega cap stock since its market cap is now over $2.5 trillion.
