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Nvidia's meteoric lift-off in the last few years has been nothing short of extraordinary.
On June 19, the US company, which manufactures chips to power Artificial Intelligence like ChatGPT, toppled Microsoft to become the world's most valuable public company, with a market cap of $3.34 trillion.
If someone had predicted this back in October 2022, people would have called them mad. How can a company that's not even worth $300 billion scale the likes of Microsoft and Apple ?
That's exactly what has happened. Since October 2022, its share price has gone up over 12 times. Even more incredible is that the stock price of the Californian chipmaker was less than 1 per cent of its current price eight years back.
Such phenomenal returns are typically associated with small-cap and penny stocks, not the world's largest company. So, how did this happen?
Two words - Artificial Intelligence (AI) - considered the new gold in the tech sector. OpenAI launched ChatGPT in November 2022 and from there started the AI race. The tailwinds of AI have boosted Nvidia's revenues and profits in an unfathomable manner. Take their revenue for instance. Their topline for 2022 was $26.9 billion, but according to the latest quarterly results, the company made $26 billion in a single quarter. Net profits, meanwhile, grew from $4.4 billion in 2022 to latest quarterly profits of $14.9 billion.
When your revenues and profits improve in such an unprecedented fashion, they are bound to reflect in the stock price.
If you are a mutual fund investor feeling FOMO (fear of missing out), we have identified eight funds that have ridden the tsunami wave of Nvidia and are still holding on. Of the eight funds, five are passives and have held Nvidia stocks by virtue of tracking the Nasdaq and S&P 500 indices.
Interestingly, two of three active funds belong to Axis Mutual Fund , a fund house that has struggled in recent years. The fact that Axis Growth Opportunities and Axis Innovation have seen their holdings grow at least 190 per cent is a minor shot in the arm for them.
Domestic mutual funds riding on Nvidia's bull run
| Fund | VR category | Current Nvidia holding (%) | Average Nvidia holding (%)* | Stock return* |
|---|---|---|---|---|
| Mirae Asset NYSE FANG+ ETF | International | 11.5 | 10.6 | 736% |
| Mirae Asset S&P 500 Top 50 ETF | International | 10.5 | 4.2 | 556% |
| ICICI Prudential NASDAQ 100 Index | International | 7.5 | 4.4 | 431% |
| Motilal Oswal NASDAQ 100 ETF | International | 7.5 | 1.7 | 31929% |
| Motilal Oswal S&P 500 Index | International | 6.1 | 1.9 | 1762% |
| Edelweiss Technology | Sectoral-Technology | 4.9 | 4.5 | 50% |
| Axis Growth Opportunities | Large & MidCap | 1.1 | 1.0 | 190% |
| Axis Innovation | Thematic | 1.1 | 0.7 | 221% |
| *Since Nvidia's entry into the fund. Holding as of May 31, 2024 and absolute price return as of June 18, 2024. FoFs that may be indirectly holding Nvidia have not been considered. | ||||
Also read: The stock that has caused a FOMO wave among investors
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