• Retail traders sent almost $30 billion into Nvidia shares this year on balance, according to Vanda Research.
• It's the latest honor for the megacap tech stock, which has shown leadership within artificial intelligence that has dazzled both Wall Street and Main Street.
• Net inflows for Nvidia have seen a nearly nine-fold jump from 2021, Vanda data shows.

As Michael MacGillivray saw artificial intelligence becoming more ubiquitous in everyday life, the 25-year-old wanted his investments to reflect that. It didn't take long to figure out how he wanted to play the trend.

"Whenever you look at AI, it's like, all the roads lead to Nvidia," said MacGillivray, who's spent thousands of dollars on shares this year from his home in Michigan. "It definitely was a great investment."

MacGillivray's purchases have contributed to the nearly $30 billion poured into Nvidia on balance by everyday investors this year, according to data from Vanda Research. That has made it the most-bought equity by retail traders on net in 2024, as of Dec. 17.

Nvidia has seen almost double the amount of net inflows from this group compared with the SPDR S&P 500 ETF Trust (SPY), which tracks the broad benchmark for the U.S. stock market. It is also on pace to dethrone Tesla, the retail investor favorite that earned the most-bought title in 2023. (The firm calculates net flows for each security by subtracting its total outflows from inflows.)

"Nvidia turned out to be the one stock that kind of stole the show from Tesla because of impressive price gains," said Marco Iachini, senior vice president at Vanda. "The performance speaks for itself."

'Up and up and up'

It's the latest feather in the cap for Nvidia. The AI titan has enamored investors big and small for more than a year. The chipmaker gained admission to the highly regarded Dow Jones Industrial Average last month and is, by and far, the 30-stock index's best performer of 2024.

Despite rocky trading in December, the "Magnificent Seven" stock is tracking to finish 2024 higher by more than 180%. That surge has propelled the stock into an elite group of companies with market caps that exceed $3 trillion. Nvidia is now the second-most valuable company in the U.S.

Naturally, this push into Nvidia shares has resulted in the stock playing a larger role in the average investor's holdings. Vanda data shows Nvidia has a weight of more than 10% in the typical mom-and-pop trader's portfolio, up from just 5.5% at the start of 2024. It's now the second largest holding of the average retail investor, sitting marginally behind Tesla.

Additionally, Nvidia's retail inflows on net in 2024 are more than 885% larger than the amount seen just three years prior.

"Nvidia really stands out in terms of how quickly retail investors became such a big part of the ownership stake," said Gil Luria, head of technology research at D.A. Davidson, an investment bank. "The ascent was remarkable."

One of those individual stockholders is Genevieve Khoury, a social media marketer. She first began buying shares in 2022 at the recommendation of her dad, who works in the technology sector. Khoury plans to sit on her shares until she can cash in the nest egg for a down payment on a home or other significant purchase.

"It kept going up and up and up," said the Los Angeles-area resident. "I'm just holding it."

'Jaw dropping'

Inflows tended to spike this year around Nvidia's earnings reports, according to Vanda's Iachini. Retail investors also bought in during an early August dip, which coincided with a broader market sell-off.

To be sure, the stock has seen inflows cool to an extent as it lost some steam. D.A. Davidson's Luria noted that shares were more expensive six months ago than in recent sessions.

Even as Nvidia continued beating Wall Street expectations for earnings, it wasn't exceeding estimates by enough to continue the stock's rapid price growth, Luria said. Now, he said the stock has come to more "balanced" and "reasonable" levels.

Despite this recent volatility, individual investors such as Prajeet Tripathy remain optimistic over the company's leadership within AI and focus on innovation. "I think that it's only going to keep rising exponentially," said Tripathy, a recent college graduate.

Though investing is largely a digital activity, market participants' love for Nvidia has spilled into the real world. Several gathered in New York City in late August for a well-documented watch party centered around Nvidia's earnings report. This event came within months of the stock's 10-to-1split, a move that's typically done to incentivize retail investors.

While Nvidia's retail ownership is substantial, this factor hasn't pushed the price-to-earnings multiple higher in the same way that it has for Tesla and Palantir, Luria said. Still, Morningstar equity strategist Brian Colello said Nvidia has "fairly significant" volatility for a stock of its size, which can underscore the role retail traders can play in driving share prices.

"It's jaw dropping at times that such a large company can have such a big move in the stock price on any given day," Colello said.

What retail investors want next

2024 marks the second straight year that a single stock has eclipsed the SPDR S&P 500 ETF Trust in net flows. However, sizable inflows to the ETF can assuage any concerns that investors are forgoing broad index funds deemed safe investments, according to Iachini. The past two years of high inflows into megcap tech names can instead reflect traders chasing the ongoing bull market, Iachini said.

Notwithstanding strong returns, Iachini said, Nvidia can be a surprising pick for the typical at-home investor. Despite Nvidia CEO Jensen Huang's signature leather jacket, the company lacks a "God-like" personality that can garner retail investor attention, Iachini said. For an example, he pointed to Tesla CEO Elon Musk, who made waves this year for his public backing of President-elect Donald Trump during the campaign.

Looking ahead, Palantir has gained traction among the retail crowd during the fourth quarter and could be a favorite in the new year, Iachini said. The software stock has been the ninth most-bought security on balance in 2024, beating Amazon, Alphabet and Microsoft, per Vanda data.

Palantir CEO Alex Karp thanked small-scale investors during a video posted Sunday that was set against a snow-covered backdrop. "Exceedingly grateful to all of you individual investors who took the time and opportunity, and had the courage to look past conventional, rusty, crusty platitudes," Karp said in the clip, while sporting reflective goggles and gripping ski poles.

Fittingly enough, Palantir was one recent pickup from Khoury, the social media marketer in California, on a friend's advice. Khoury is hopeful for a Nvidia-like run, so she can retain bragging rights with acquaintances who believe they know more about investing than her. It's going well so far: The stock has skyrocketed close to 380% in 2024, making it the best performer in the S&P 500 year-to-date.

"Multiple times in college, people would try and talk to me about it like I didn't know what I was talking about," said Khoury, who graduated this year with a degree in finance. "I'm like, sure, yeah, I don't know what I'm talking about, but I do have Nvidia."

"Probably," she said, "my portfolio looks better than yours."