In a remarkable shift within the stock market landscape, NVIDIA has recently overtaken Tesla as the stock with the highest net purchases by retail investors for the year 2024. According to Vanda Research, by December 17, 2024, retail investors had poured an astounding $29.8 billion into NVIDIA, nearly double the $15 billion invested in the second-place SPDR S&P 500 ETF Trust and leaving Tesla trailing in third with $14.7 billion from last yearThis surge in retail investment is significant, indicating a seismic shift in investor sentiment towards companies heavily anchored in artificial intelligence (AI) technology.

Marco Iachini, a senior vice president at Vanda, has lauded NVIDIA as a standout performer with its share price experiencing an astronomical rise, something that has not only turned heads but has also set it apart from other technology stocksIndeed, as of December 24, 2024, NVIDIA's stock had skyrocketed over 183%, translating to a staggering market capitalization increase of more than $2.2 trillion

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On that particular day, NVIDIA shares closed at $140.22, bringing the total market value to approximately $3.43 trillion.

This shift in retail investment is noteworthy when compared to three years ago when the net inflow of retail money into NVIDIA surged by an impressive 885%. The company's proportion in the average retail investor's portfolio has witnessed rapid growth, increasing from 5.5% at the beginning of the year to 10% by year's end, thereby cementing its position as the second-largest holding among retail investors, just behind Tesla.

Further enhancing this narrative, Iachini noted that significant spikes in capital inflow around NVIDIA's earnings report dates often capture market attentionFor instance, during early August, amidst a broader market sell-off, NVIDIA's stock price took a hit; yet, this dip attracted considerable buying from retail investors, eager to capitalize on what they perceived as a temporary downturn in a fundamentally strong company.

In the analysis of Gil Luria, head of technology research at investment banking firm DA Davidson, NVIDIA stands out significantly as retail investors increasingly become a critical element of its shareholder structure

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He remarked on how the stock's upward trajectory has been remarkable and deserves scrutinyHowever, Luria also presented a cautionary note, suggesting that despite NVIDIA’s continuous revenue growth exceeding Wall Street expectations, the degree to which it surpasses these forecasts may not be sufficient to sustain its rapid stock price escalationHe posited that the stock price is now at a “more balanced and reasonable” valuation.

The increasing retail ownership has also contributed to heightened volatility surrounding NVIDIA’s stockBrian Colello, a stock strategist at Morningstar, noted that as a high-market-cap company, NVIDIA's stock has exhibited “significant” volatility, with large price swings occurring within single trading days – a phenomenon that many investors find surprising.

Presently, NVIDIA seems to be reaping the benefits of the AI craze

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Following the release of its third-quarter financial results for the fiscal year ending October 27, 2025, which reported revenues of $35.08 billion—an eye-watering 94% increase year-over-year—NVIDIA’s leadership has expressed confidence in upcoming product linesCEO Jensen Huang announced that their next-generation AI chip, Blackwell, has now commenced full-scale productionThe Chief Financial Officer Collette Kress indicated that Blackwell's revenues could potentially reach “billions of dollars” by the fourth quarter.

Nevertheless, there are uncertainties looming over NVIDIA's stock price trajectoryAnalysts from Wall Street anticipate a slowdown in year-over-year revenue growth in upcoming quarters, predicting a dip to approximately 45% by the second half of 2025.

Notably, semiconductor giant Broadcom has recently gained momentum in the market following a robust earnings report, with some analysts eyeing it as the “next NVIDIA.” For its fiscal year ending on November 3, 2024, Broadcom reported adjusted net revenue of $14.04 billion, marking a 51% increase from the previous year

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CEO Hock Tan signaled that demand for AI solutions would surge entering 2025, projecting that three major corporate clients, including Apple, might invest between $60 billion to $90 billion on custom AI components supplied by Broadcom in the 2027 fiscal year.

Broadcom primarily produces ASICs (Application-Specific Integrated Circuits), which are specialized chips tailored for particular applications, predominantly aimed at large enterprise customersAnalysts contend that as AI inference needs to grow and diversify, the demand for customized chips is also on the rise, potentially impacting NVIDIA’s market share, which has historically focused on general-purpose GPUs.

However, current outlooks suggest that the high design costs associated with ASICs could constrain their customer base's scalabilityMorgan Stanley analysts have forecasted that by 2027, ASICs will account for 13% of all AI accelerator sales, a modest increase from 11% in 2024, with projections indicating a rise to 15% by 2030.

According to Antoine Chkaiban, an analyst at New Street Research, only tech giants like Google and Amazon have implemented large-scale deployments of custom AI chips, reinforcing NVIDIA’s capacity to maintain its preeminence in the AI accelerator market.

BofA analysts have predicted that NVIDIA will continue to hold a remarkable 75% market share by 2030, down slightly from the predicted 80% in 2024. Analyst Vivek Arya included NVIDIA among his top recommended chip stocks for 2025, along with Broadcom and Marvell Technology.

Arya remarked upon the robust competition in the AI stock market, highlighting an ongoing “arms race” among cloud service providers

He observed that the expansion of market opportunities now encompasses on-premises deployments and sovereign AI implementations, while advancements in AI training and inference are accelerating at a rapid paceNonetheless, Arya warned that after experiencing two consecutive years of over 100% annual growth, AI stocks could peak by the second half of 2025.

In the latest report, Morgan Stanley has further designated NVIDIA as their “stock of choice” for the upcoming year and reaffirmed a bullish outlook with an "overweight" rating, assigning a target price of $166 per share.

Morgan Stanley analysts' outlook appears more optimistic than that of BofA, suggesting that Blackwell chips could become a “driving force behind revenue growth” for NVIDIA in the latter half of 2025, allaying investor concerns regarding short to mid-term performance and signaling that the stock could potentially see substantial upward movement.