Nvidia’s insane stock rally Thursday pocketed $184 billion in one day for investors. More specifically, it pushed Nvidia’s status in the S&P 500 past Warren Buffett’s Berkshire Hathaway — again.
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Shares of Nvidia (NVDA) rose more than 26% in a day after revenue collapsed. That made the chip designer worth $939.3 billion overnight — a remarkably large profit for a massive S&P 500 stock of this size. And Nvidia’s value skyrocketed Berkshire Hathaway (BRKB) as the fifth most valuable stock in the S&P 500. Buffett’s investment company is worth $702 billion.
Nvidia is just one example of how big-cap tech stocks are absolutely carrying the S&P 500 this year. This one stock accounts for 23% of the $2.6 trillion S&P 500 investors earned this year. Berkshire Hathaway’s gains this year are just 0.8%.
“Big Tech is back, and not a moment too soon for US equity investors,” said Nicholas Colas of DataTrek Research.
You would lose money if it weren’t for Big S&P 500 Tech
You can thank megacap techies for the S&P 500’s impressive gains this year. It’s not just hyperbole.
If you discounted the top eight S&P 500 stocks this year, the S&P 500 would have fallen 0.3% instead of rising nearly 8%, said Howard Silverblatt, index analyst at S&P Dow Jones Indices. And the S&P 500 would be down 0.4% if you exclude the information technology and communications services sectors.
Being in the wrong place in the S&P 500 this year is expensive. More stocks in the S&P 500 (271) fell this year than rose. And some are total failures. So far, 43 S&P 500 stocks are down 20% this year, while only three more than that are up 20% or more, Silverblatt found.
Shares of Nvidia are up nearly 160% so far through 2023.
Nvidia pushes others aside, including Warren Buffett
Nvidia more than pulls its weight in this year’s tech-driven rally.
It is the third-largest contributor to S&P 500 earnings this year. That’s impressive when you consider that it’s still only the fifth most valuable company in the index. But thanks to its key position in the AI ​​revolution, Nvidia is making rapid advances. This is Nvidia’s second time ahead of Berkshire Hathaway in terms of market value. It previously did in November 2021 until it dipped back down again in early 2022.
But Nvidia is back. It is now only 23% behind Amazon.nl‘s (AMZN) valuation of $1.2 trillion. And it only needs to gain 64% to catch up Alphabet (GOOGL). It may seem strange to call a 64% rally small, but Nvidia’s company has a mountain of enthusiasm behind it. Analysts believe demand for chips to power AI systems will boost Nvidia’s profits by 132% this fiscal year.
That’s a stock that Buffett probably wishes he owned right now.
Most Valuable S&P 500 Companies
Nvidia just passed Berkshire Hathaway in market cap
| Company Name | Ticker | Year to date % ch. | Market Value ($ trillions) |
|---|---|---|---|
| Apple | (AAPL) | 33.1% | $2.7 |
| Microsoft | (MSFT) | 35.9% | $2.4 |
| Alphabet | (GOOGL) | 40.0% | $1.6 |
| Amazon.nl | (AMZN) | 36.9% | $1.2 |
| Nvidia | (NVDA) | 159.9% | $0.9 |
| Berkshire Hathaway | (BRKB) | 3.3% | $0.7 |
| Meta platforms | (META) | 110.0% | $0.6 |
| Tesla | (TSLA) | 49.8% | $0.6 |
| Visa | (V) | 7.5% | $0.5 |
| UnitedHealth group | (UNH) | -9.9% | $0.4 |
Sources: S&P Global Market Intelligence, IBD
Follow Matt Krantz on Twitter @mattkrantz
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