Nvidia's insane stock rally Thursday put $184 billion into investors' pockets in one day. More notably: It pushed Nvidia stature in the S&P 500 past Warren Buffett's Berkshire Hathaway — again.
Shares of Nvidia surged more than 26% in a day following blowout earnings. That made the chip designer worth $939.3 billion overnight — a remarkably sized gain for a giant S&P 500 stock of this size. And Nvidia's value blasted past Berkshire Hathaway 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 technology stocks are absolutely carrying the S&P 500 this year. Just this one stock accounts for 23% of the $2.6 trillion gained by S&P 500 investors this year. Berkshire Hathaway's gain this year only accounts for 0.8%.
"Big Tech is back, and not a moment too soon for U.S. equity investors," said Nicholas Colas of DataTrek Research.
You'd Be Losing Money If Not For Big S&P 500 Tech
You can thank megacap techs for the S&P 500's impressive gains this year. It's not just hyperbole.
If you excluded the top eight S&P 500 stocks this year, the S&P 500 would be down 0.3% instead of being up nearly 8%, says Howard Silverblatt, index analyst at S&P Dow Jones Indices. And the S&P 500 would be down 0.4% if you omitted the information technology and communication services sectors.
Being in the wrong place in the S&P 500 this year is costly. More stocks in the S&P 500 (271) are down this year than are up. And some are total wipeouts. 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% in 2023 so far.
Nvidia Is Pushing Others Aside, Including Warren Buffett
Nvidia is more than pulling its weight in this year's tech-driven rally.
It's the third-largest contributor to the S&P 500's gain this year. That's impressive if you consider it's still only the fifth most valuable company in the index. But thanks to its key position in the AI revolution, Nvidia is rising fast. This is the second time Nvidia pulled ahead of Berkshire Hathaway in terms of market value. It did it before in November 2021 until sinking back below in early 2022.
But Nvidia is back. It's now only 23% behind Amazon.com's $1.2 trillion valuation. And it only needs to gain 64% to catch up with Alphabet. It might seem odd to call a 64% rally small, but Nvidia's business has a mountain of gusto behind it. Analysts think demand for chips to power AI systems will push Nvidia's earnings up 132% just this fiscal year.
That's a stock Buffett probably wishes he owned right now.
Most Valuable S&P 500 Companies
Nvidia just passed up Berkshire Hathaway in market capitalization
| Company Name | Ticker | Year-to-date % ch. | Market value ($ trillions) |
|---|---|---|---|
| Apple | 33.1% | $2.7 | |
| Microsoft | 35.9% | $2.4 | |
| Alphabet | 40.0% | $1.6 | |
| Amazon.com | 36.9% | $1.2 | |
| Nvidia | 159.9% | $0.9 | |
| Berkshire Hathaway | 3.3% | $0.7 | |
| Meta Platforms | 110.0% | $0.6 | |
| Tesla | 49.8% | $0.6 | |
| Visa | 7.5% | $0.5 | |
| UnitedHealth Group | -9.9% | $0.4 |
Sources: S&P Global Market Intelligence, IBD
Follow Matt Krantz on Twitter @mattkrantz
