As 2024 comes to a close, artificial intelligence (AI) has strengthened its position as a transformative force, not just in technology but also in the financial markets. Investors flocked to securities that reflected the AI revolution and broader economic themes.
The most-bought securities this year are NVIDIA NVDA (hauled in about $29.8 billion), SPDR S&P 500 ETF Trust SPY (about 15.3 billion), Tesla TSLA ($14.7 billion), Invesco QQQ Trust QQQ ($9.8 billion), and Advanced Micro Devices AMD ($9.8 billion), as quoted on CNBC.
Three stocks – NVIDIA, Tesla and AMD are AI plays while Tesla specifically enjoyed the Trump bump this year. Meanwhile, SPY and QQQ ETFs benefitted from the greater presence of “Magnificent Seven” stocks in them.
In a nutshell, the dominance of NVIDIA, SPY, Tesla, QQQ, and AMD underscores a few key themes in 2024 – the AI boom and the resultant tech leadership as well as investors’ search for safety in the form ETF investing. Whether through individual stocks or diversified ETFs, investors have made it clear: in 2024, AI was king.
NVIDIA stood out as the most-loved security of 2024, amassing nearly $30 billion in net inflows from retail investors. NVDA shares surged over 180%, fueled by its dominance in AI hardware and software solutions. Net inflows for NVIDIA shares have seen a nearly nine-fold jump from 2021, per Vanda data, as quoted on CNBC.
AI Omnipresence: NVIDIA's GPUs became the backbone of AI infrastructure, powering applications from machine learning to generative AI.
Market Leadership: The company joined the elite $3 trillion market cap club and entered the Dow Jones Industrial Average, underscoring its growing influence.
Retail Investor Favorite: NVIDIA's share of the average retail portfolio grew from 5.5% to over 10% in 2024, reflecting widespread belief in its long-term potential.
Despite December's volatility, investors like Genevieve Khoury, who started buying Nvidia in 2022, remain bullish. Note that the SPY ETF was crowned the most-traded security in 2022 and 2021 and earned the second spot in 2023. However, in 2024, NVIDIA claimed the top position, pushing SPY down a notch.
The SPY ETF, which tracks the S&P 500, remained a constant choice for investors seeking stability in a volatile market. It garnered $15.3 billion in net inflows in 2024, making it the second-most popular security.
Broad Market Exposure: SPY provides a diversified portfolio, offering exposure to the U.S. economy's top 500 companies. Investors were drawn to SPY for its safer yet lucrative exposure, offering a balance between individual stock investments and broad market exposure.
Tech-Driven Growth: Mega-cap tech stocks like NVIDIA and Tesla, along with other members of the 'Magnificent Seven'—prominent components of the S&P 500—drove much of the fund's performance.
Tesla, a longtime favorite among retail investors, continued to attract significant attention, with $14.7 billion in net inflows. While its 2024 returns didn’t outshine NVIDIA, it maintained its allure due to a combination of electric vehicle (EV) leadership and AI integration.
AI Integration: Tesla's advancements in autonomous driving and AI-enhanced manufacturing processes kept it at the forefront of innovation. At the start of 2024, Tesla stated it would spend around $10 billion this year in combined training and inference AI..
Visionary Leadership: CEO Elon Musk’s high-profile backing of AI and other ventures sustained the company's appeal to retail traders.
Trump Bump: Since Donald Trump's victory in the 2024 U.S. presidential election, TSLA stock has been making waves in the stock market, due to CEO Elon Musk's strong relationship with President-elect Trump. Investors are hoping for federal deregulation for Tesla (read: Tesla Stock Hits All-Time High: ETFs to Ride the Momentum).
The QQQ ETF, which tracks the Nasdaq-100, secured $9.8 billion in net inflows, tying with AMD for fourth place. Its tech-heavy focus made it a go-to choice for those betting on the AI-driven market rally with lesser risks.
Tech Dominance: Top holdings like NVIDIA, Microsoft, and Tesla benefited from AI breakthroughs and robust consumer demand.
Bull Market Momentum: As technology stocks led the charge in 2024, QQQ became a proxy for the sector’s success.
AMD tied with QQQ in net inflows, drawing $9.8 billion from investors. The company’s strides in AI and gaming positioned it as a strong competitor to NVIDIA.
AI Innovations: AMD unveiled cutting-edge chips aimed at capturing a larger share of the AI market. Some investors probably viewed AMD as an undervalued alternative to NVIDIA.
Gaming and Data Centers: With continued growth in gaming and cloud computing, AMD solidified its role as a tech leader.
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