Nvidia’s stock has been a major force in the S&P 500 this year. The company’s huge gains and the high trading volume of its stock options have driven a lot of the index’s ups and downs. At times, Nvidia options have made up as much as 30% of all daily stock option trades.
This shows just how much traders are focused on the company. Nvidia’s performance in 2024 has been incredible. Its gains have been much bigger than other top companies in the S&P 500.
This has made it a dominant player in the market. The heavy trading of Nvidia’s stock has led to big day-to-day swings in the broader S&P 500. It highlights how much influence the company has on the overall market.
Despite the excitement around Nvidia, not everyone on Wall Street thinks its high valuation will last. Economist Harry Dent has warned that Nvidia’s stock could drop by as much as 98%. Dent believes that a big increase in the money supply has set up the U.S. economy and stock market for trouble.
He calls it the “bubble of all bubbles.”
However, a 98% drop is unlikely for Nvidia.
Nvidia drives major S&P 500 swings
The company is a key supplier of GPUs used in gaming and crypto mining.
These areas provide some protection against a total collapse, even though they are not as important as Nvidia’s AI business. Nvidia’s stock price may not fully reflect the company’s true value. Its shares have gained nearly 150% in the past year.
Investors have to decide where the stock will go from here. Nvidia makes most of the advanced chips that power AI. This has turned it into a profit machine, with amazing earnings that have lifted the whole stock market.
But in late August, excitement around Nvidia started to fade. “The magic spell has broken,” said Aswath Damodaran, a finance professor at New York University. The key questions for investors are: How big will AI become?
What role will Nvidia play? And most importantly, what is Nvidia really worth in the long run? The answers matter for the entire tech market, where AI and Nvidia are very important.
