Nvidia’s impact on the S&P 500 and AI’s reach
As I consider Nvidia’s growth trajectory, I’m struck by its significance within the S&P 500 Index, where it now represents 7%[1] of the total weight and accounts for roughly a quarter of this year’s 21% gain in the index.* This surge is unprecedented and reinforces how deeply AI has penetrated the highest echelons of Wall Street. Interestingly, Nvidia previously claimed the title of largest company in June, albeit for only a single day. Today, the title seems far more secure, backed by sustained market enthusiasm and AI’s rapid advancement.
Looking across the tech landscape, the biggest companies are positioning themselves heavily in AI. Apple has integrated AI into its latest iPhones, Microsoft, Amazon, and Alphabet are expanding their AI-powered cloud services, and Meta Platforms is leveraging AI for advertising. Most of these tech giants are also Nvidia’s top customers, highlighting the company’s critical role in AI’s growth. While Apple’s recent earnings hinted at slowed revenue growth and potential challenges in China, Nvidia’s results, expected later this month, could reveal a very different story.
Nvidia: The top performer in an AI-dominated market
It’s notable that Nvidia isn’t just leading in market cap—it’s also one of the top-performing stocks this year, with a 183% gain in the S&P 500.* This increase is only outpaced by Vistra Corp., a power producer benefiting from AI-related demand, and Palantir Technologies, a data-analytics firm expanding its AI capabilities. Nvidia’s share price momentum has strengthened in recent weeks as it alleviated investor concerns over its delayed Blackwell chip and long-term growth potential.*
Analysts continue to be optimistic about Nvidia’s future, forecasting that its revenue will more than double this fiscal year, followed by a 44% increase next year. With Wall Street analysts consistently raising their profit and earnings projections, Nvidia’s growth trajectory remains compelling. Beyond the Blackwell chip outlook, other indicators—such as Taiwan Semiconductor Manufacturing Co.’s strong AI-related sales and OpenAI’s recent funding round valuing it at $157 billion – affirm that demand for AI infrastructure is only intensifying. [1]
The bigger picture
Reflecting on the broader market, I see that not only are the largest companies AI-driven, but the top-performing stocks of the year also have deep AI connections. As an investor, it’s clear to me that AI will remain a cornerstone of tech growth for years to come, reshaping industries and redefining competitive landscapes.
Nvidia’s ascent to the world’s largest company signals that the AI boom isn’t a passing trend but rather a seismic shift that will continue to impact market dynamics. The prospects for Nvidia and the broader AI sector remain promising, with high potential for continued growth as these companies pursue their ambitious AI investments. In this new age of technology-driven growth, Nvidia stands as a leader, a key enabler of the AI revolution that promises to transform the future. [2]
* Past performance is no guarantee of future results
[1], [2] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.
[1] Price performance of the S&P 500 Index over the past five years: https://tradingeconomics.com/spx:ind