Nvidia Drives Over 33% of S&P's 2024 Growth

The S&P 500 is enjoying a strong year in 2024, driven by the outstanding performance of chipmaker Nvidia. According to Stocklytics.com, Nvidia has significantly boosted the index, contributing 33.73% of its returns this year with its soaring stock price.

Stocklytics financial analyst Edith Reads commented on the data:

Nvidia’s significant contribution to the S&P 500’s growth in 2024 highlights its financial prowess and role as a key driver of innovation in the tech sector. The wide use of AI chatbots and demand for Nvidia GPUs have fueled the company‘s astounding success. The broad accessibility of Nvidia’s platform and its extensive customer base have also solidified its position in the chip market

Stocklytics financial analyst, Edith Reads

S&P 500 Top Contributors

As of June 13, 2024, Nvidia’s outsized impact on the S&P 500 was evident, with the company contributing 33% (YTD) to the index’s total returns. This impressive performance has been fueled by a staggering 162% increase in Nvidia’s share price year-to-date. The escalated demand for its AI chips is a major cause for the rise of its share prices.

Microsoft ranks second, contributing 8.47% year-to-date returns to the S&P 500. Its remarkable performance stems from substantial investments in AI startups such as OpenAI and Wayve. Additionally, the company’s engagement in AI development and cloud services has driven substantial profits, with revenue climbing 17% year over year as of Q2’24.

Alphabet trails Microsoft, contributing 6.62% to the index’s year-to-date (YTD) returns. Meta and Apple follow closely, contributing 5.73% and 5.53% to the index’s YTD returns, respectively.

All these top five stocks drive about 60% of the S&P 500’s returns, hinting that AI development could be the most profitable sector now and in the forthcoming years.

Nvidia’s Current Standings

Nvidia dominates the AI chip market, capturing between 70% to 95% market share, with its revenue tripling each quarter recently. This surge has propelled its stock by 150% in the first half of 2024.

The company’s momentum surged following the launch of ChatGPT in November 2022, which thrust generative AI into the spotlight and inspired unprecedented demand for AI hardware. 

Nvidia intends to maintain its lead in the AI chip game, expressing its confidence in maintaining its market position, even as rivals AMD and Intel work hard to throw it off. 

“Nvidia clearly intends to keep its dominance for as long as possible, and in the current generation, there is nothing really on the horizon to challenge that,” said Richard Windsor, founder of Radio Free Mobile, a research company focusing on the digital and mobile ecosystem.

The company has realigned its focus from gaming to data centers, investing in expanding into new markets. Notably, Nvidia is also collaborating with a wide range of computer manufacturers and cloud providers to bolster its presence in the industrial robotics sector. The company’s ability to deliver substantial growth may propel the stock, but there is also a chance that the near-term demand is already reflected in the current share price, which could constrain the stock’s potential gains by the end of the year.

Wall Street analysts hint that investors may eventually become disappointed if Nvidia’s future financial results either beat estimates by a more modest amount or miss them entirely. So far, Nvidia has beaten revenue and earnings estimates by at least 6% and 10% in four straight quarters, underscoring the firm’s impressive trajectory gains.