Nvidia was the most preferred stock for retail investors in the last year. The stock saw $30 billion in inflows in 2024, making it the people’s favorite, surpassing both Tesla and the S&P 500 ETF SPY. What made the stock a favorite among retail investors and will the trend continue in 2025? Let’s find out.
Nvidia’s 2024 returns stood at around 180%. Retail investors generally chase stocks that are having a good price surge and Nvidia did just that right at the start of the year, gaining 30% within a month. The arrival of Blackwell GPUs and continued AI spending made for an easy bullish investment thesis on the company, and investors continued to pile in. Despite muted returns in the second half of the year, Nvidia continued to generate headlines and attract retail investors’ money.
This positive sentiment towards the stock is unlikely to change in 2025. The year kicks off with CEO Jensen Huang delivering the keynote address at the CES 2025 in Las Vegas. He’ll be talking about the metaverse and virtual reality, AI, and accelerated computing. But everyone will be eager to listen to any new product development. Such an announcement could continue to drive the retail investor sentiment, but we will have to wait a few days to find out.
It wouldn’t be too far-fetched to say that the new development, if any, comes in the field of robotics, as there’s unlikely to be a new GPU announcement anytime soon. The company is expected to be a rival of Tesla, which is also working on its humanoid robot, Optimus. Both Tesla and Nvidia are retail investors’ favorite stocks and a rivalry in robotics would make for an interesting scenario in 2025.
The reason there is so much optimism around robotics is because the increasingly powerful GPUs, advanced sensors, and the ability to train robots on vast amounts of data have made robots both practically and financially feasible. We may well be at an inflection point where high-performance computing, combined with improving software, could help automate the way robots work in industries. Interestingly enough, Nvidia’s Omniverse, which allows people to create 3D worlds in real time, makes Nvidia a strong player in this field. Through its Omniverse and powerful computing, Nvidia can help speed up the training of humanoid robots. We may be getting ahead of ourselves but imagine a scenario where Nvidia monetizes this platform and training capability to train workers for the Big Tech! The AI spending will dwarf in comparison to that.
Nvidia is 5th on our latest list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 193 hedge fund portfolios held NVDA at the end of the third quarter which was 179 in the previous quarter. While we acknowledge the potential of NVDA as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.