This year’s 59% rally in $Nvidia (NVDA)% has propelled the stock to the fifth-highest rating in the S&P 500 ($SPX) (SPY). Since posting a 2-1/2 year low in October, Nvidia has more than doubled in price and climbed to an 11-month high last week. The artificial intelligence (AI) frenzy has fueled the 5-month rally on expectations that demand will soar for Nvidia’s chips needed for complex AI computing tasks.
According to data compiled by Bloomberg, the weighting of the five biggest companies in the S&P 500 Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon.com (AMZN), and Nvidia) has risen to 21% since bottoming in early January at around 18%. However, that is still well below the high of 26% in late 2021 at the peak of the pandemic-induced rally.
Nvidia and Tesla are two of the biggest gainers in the S&P 500 this year, with both stocks climbing more than 50%. Nvidia is capitalizing on soaring interest and investment in AI, and its weighting in the S&P 500 has risen to 1.7%. However, Apple, whose $2.3 trillion market value gives it the largest weighting in the index at 6.6%, has been the most significant contributor to this year’s 2.9% rally in the S&P 500.
With a market value of nearly $560 billion, Nvidia is now the world’s most valuable chipmaker, moving above Taiwan Semiconductor Manufacturing Co last month. It has surged past its rival Intel (INTC), whose capitalization is only $100 billion, even after generating more than twice Nvidia's revenue last year.
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