Nvidia continues to experience exponential growth, with its stock reaching new heights and setting the pace for the S&P 500.

Astronomical Stock Performance

After a staggering 16% surge on Thursday, Nvidia saw an additional 0.4% increase in Friday trading, closing at an impressive $788.17 per share. The chipmaker's year-to-date growth sits at a remarkable 59%, boosting its market capitalization by a whopping $747 billion. This surge has resulted in the stock tripling in value so far in 2023.

Single-Stock Dependence

Nvidia's astounding performance has contributed significantly to the overall gains of the S&P 500. A substantial 28% of the total gains, totaling nearly $2.7 trillion, can be attributed to Nvidia alone. Meta Platforms followed with a 12% contribution, while Microsoft and Amazon.com accounted for 10% and 9%, respectively.

Market Dynamics

Interestingly, the dominance of Nvidia, Meta Platforms, Microsoft, and Amazon.com is evident as they collectively drive 60% of the S&P 500 gains in 2024. Conversely, other major players like Tesla, Apple, and Alphabet have not been able to maintain their momentum. Tesla shares have dipped by 23%, Apple by 5%, and Alphabet has seen a mere 3% gain.

Market Capitalization Milestones

Nvidia's market capitalization has once again surpassed that of both Amazon and Alphabet, solidifying its position as the third most valuable stock in the U.S. This accomplishment marks the second time Nvidia has overtaken its tech counterparts, as it claimed the spot for the first time back on Feb. 14. With a market cap nearing $2 trillion, Nvidia's presence accounts for nearly 5% of the S&P 500 index, trailing behind only giants like Microsoft at $3 trillion and Apple at $2.8 trillion.

Nvidia's Remarkable Growth

The past year has seen Nvidia's stock skyrocket, expanding by over five times in size. Starting at a market cap of $360 billion in 2023, it was equivalent to just 17% of the size of Apple, the leading stock at the time, and made up 1% of the S&P 500 index.

Driving Forces Behind the Surge

Amidst the remarkable growth in the stock market, Nvidia's valuation remains relatively reasonable compared to other tech giants. The company's production of crucial chips for artificial intelligence positions it well to capitalize on the increasing demand.

CEO's Insights

CEO Jensen Huang foresees a doubling in the number of data centers over the next five years due to the surge in investments fueled by generative AI. This emerging trend is creating a new industry that is fueling Nvidia's expansion.

Impressive Financial Performance

In the recent quarter ending in January, Nvidia experienced a whopping 265% rise in revenue from the previous year, reaching $22.1 billion. Particularly noteworthy was the over fivefold increase in revenue from the data-center business, soaring to $18.4 billion.

Future Projections

Analysts are optimistic about Nvidia's performance for fiscal 2025, projecting earnings of $24.6 per share - almost double the previous year's results and seven times higher than fiscal 2023 figures. Currently trading at 32 times forward earnings, Nvidia outshines Apple, Meta, and Alphabet, but comes at a lower price compared to Microsoft, Amazon, and Tesla.

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