I probably do not have to tell you that Nvidia has really blown up over the past few years. The tech company is at the forefront of the AI revolution thanks to its advanced chips. It’s seemingly leaps and bounds ahead of would-be competitors. If a company wants to make progress on artificial intelligence — as most of the tech sector now does — all roads run through Nvidia. This superdominant position helped the 31-year-old company book $30 billion in revenue in the second quarter of the year, up by 122% from a year ago and some $2 billion more than Wall Street analysts were expecting. Investors, in turn, have been eating Nvidia up. Despite some recent turmoil, shares of Nvidia are still up by more than 100% from this time in 2023 and by more than 2,000% over the past five years.
Nvidia’s quarterly earnings reports have turned into a referendum on the future of the whole stock market and even the US economy — a highly anticipated financial event like the jobs report or an inflation print. Nvidia’s most recent earnings report prompted an unofficial watch party in New York City. Its CEO, Jensen Huang, has achieved rock-star status, and his leather-jacket aesthetic is the subject of endless media fodder. In the spring, the company hosted a four-day conference that observers informally dubbed “AI Woodstock.”
“When you see these types of disruptive technologies or companies out there, there are just both institutional and retail investors out there that really kind of fall in love with these stories,” said Angelo Zino, a senior vice president at CFRA Research who covers tech.
Even if you’re not trying to pay attention, you sort of can’t escape Nvidia mania. It’s a significant chunk of the S&P 500. Its moves are all over the news. Hell, even the CNBC host Jim Cramer named his dog after it.
“If people were going to be going crazy about a stock, wouldn’t it be this one?” said Josh Brown, the CEO of Ritholtz Wealth Management and a market commentator. “Why wouldn’t people be as enthusiastic as they are?”
As much as Nvidia is a big deal, the fanfare is a little weird. It’s the same kind of weird as that one coworker who talks about their cat too much or the friend who seems to still know an awful lot about their ex from a decade ago. It’s giving Elon Musk fanboys, NFL Swifties, the KHive before Kamala Harris was at the top of the Democratic ticket.
I’m not saying Nvidia is a cult, but the whole thing is a bit culty. A lot of investors could probably stand to calm down. Fandom is always a little strange, but this kind of attachment is even more peculiar when it’s to a stock — as any half-decent financial advisor can tell you, one of the primary ways to get ahead in investing is to keep your emotions out of it.
I recently reached out to Serious Wall Street People and random retail investors I found on the internet to talk about what they make of all the Nvidia hullabaloo. What was striking was how alike many of them sounded. Dan Ives, an analyst at Wedbush Securities, compared Nvidia to “Lebron in high school” and described Huang as the “godfather of AI” and a “grand-master chess player.” Both he and Daniel Williams, a 22-year-old day trader from New York, emphasized their belief that the company is leading the fourth industrial revolution. “Nvidia is the quarterback,” Williams said.
In a market often framed as the retail day-trading Davids versus the institutional Wall Street Goliaths, Nvidia seems to be the one thing that can get David and Goliath to hold hands and skip through a meadow. Everybody likes it when the number goes up.
“There’s a lot of academic research about why retail investors buy stock, and the No. 1 attention grabber is big returns,” said Christopher Schwarz, a finance professor at the University of California Irvine’s Paul Merage School of Business.
Nvidia is a successful business that’s achieved meme status. It makes a lot of money, and if you think this whole AI thing is going to work out and Nvidia’s going to be able to keep competitors at bay, there’s no reason to think it’s anything short of a great investment. It’s also volatile, and that roller-coaster thrill can add to the appeal for some traders. As Axios’ Felix Salmon recently pointed out, Nvidia can be an avenue for investors to scratch that gambling itch.
Jack, a moderator of a subreddit dedicated to Nvidia’s stock, finds some of the memes around Nvidia irksome. He became one of the forum’s referees after complaining that “mindless nonsense” there diluted its value as an information source. On big days for Nvidia, like when it releases its earnings reports, he focuses on keeping the subreddit from catching fire and leaves his holdings alone. Jack, a psychology student in Maine who asked to have his last name withheld to protect his privacy, is a pretty straightforward investor, but he’s also 23, and he came up in the era of Wall Street Bets and GameStop. He knows that, businesswise, Nvidia is vastly different from GameStop — an advanced tech company at the forefront of a monumental computing shift is not the same as a video-game retailer in structural decline. But given the sheer number of wild bets made on the chipmaker, mostly through options trading, Jack can’t help make the comparison, at least meme-wise.
Nvidia “isn’t, like, a joke,” he said. “It’s actually seriously one of the most innovative and quickly growing companies that the world has ever seen. And so I think that people are kind of treating it as if it’s GameStop, where it has this incredible jump, and they’re like, ‘Oh my God, what is this going to turn into?’ So there’s a lot of fear around it, but in reality, the numbers go to show that it’s quite sustainable, actually.”
The fervor Nvidia is generating isn’t exactly like interest in other companies or investments, past and present. Some of this feels Tesla-esque — a group of investors who are dedicated to a company and CEO and who sometimes feverishly fight off detractors. Or it can look like Apple, beloved by many investors and actual customers, though Nvidia’s recent rise has been faster and come later in the company’s life. Some of the speculation around Nvidia seems a little crypto-y, as does the drumbeat of retail interest in it. If you squint, you can see a resemblance to Berkshire Hathaway and Warren Buffett, who together draw thousands of people to Omaha, Nebraska, every year and garner headlines every time they release financial results or holdings — or Buffett just says something. There’s also a not-so-rosy comparison to Nvidia: Cisco, a ’90s tech darling that never recovered from the dot-com bubble’s burst. Huang has reportedly even expressed concerns about it and wants to make sure his company doesn’t meet the same fate.
“Cisco is a great analogy to what’s going on where just people just fawn over these things,” Schwarz said.
Brown argued that there really isn’t anything you can compare Nvidia to at the moment. “I don’t think there is any analogue throughout history,” he said. “It’s very much miraculous.”
Ted Mortonson, a managing director at the investment firm Baird, also emphasized the unprecedented nature of it all, especially given the amount of money Nvidia is bringing in. “They’ve defied the law of gravity from a model perspective,” he said. “It’s one of these companies you see in every couple of decades.”
I am not a stock analyst, nor do I pretend to be one. I have no idea where Nvidia is headed in the next six months or two years or five years, nor can I predict what will — or won’t — happen with AI. When it comes to Nvidia, though, that doesn’t make me an outlier. Everyone — from the Reddit options traders betting each week on whether the stock will go up or down to the TV analysts cooly declaring that the robots will take everyone’s jobs in five years — is a little bit guessing where this is headed. Being too emotionally tied to an Nvidia investment (or any investment, really) can prevent people from being clear-eyed about the downsides.
There are some risks. A handful of big companies are spending very aggressively on big AI bets, and if they’re not getting the returns on that investment capital they expected, that spending could slow.
“There are only a few companies that are making money off of generative AI,” Mortonson said. If more companies don’t start seeing some bang for their buck, he added, then at some point there may just be a pause in all the spending.
Technologically, Nvidia is very far ahead of its competitors. It really is the only game in town in terms of the high-end chips it’s producing. (The Department of Justice is also reportedly looking into this competition issue.) But that probably won’t last forever.
“Nvidia, I think, has a great product,” Schwarz said, “but I also think that people underestimate how all of Nvidia’s biggest customers also make their own chips and have no interest in giving Nvidia all of their money forever.”
Having a superstar like Huang at the helm probably does, for a lot of people, calm some nerves. After all, Nvidia has been around since 1993, and he’s been pretty prescient on all this.
“If Jensen’s flying the plane, institutional investors feel very comfortable sitting in 3A, drinking their cabernet,” Ives said.
The obsession with Nvidia is not happening in a vacuum. The cultural vibe of the moment is very much one of gambling. For a lot of people, sports betting, crypto, meme stocks, and even regular stocks are ways to get the same kind of dopamine hit you’d expect in a casino. Nvidia is probably one of the safer gambling-adjacent bets an investor can make (though options can be a different story). Nobody thinks that the company will disappear overnight or that its valuation will plummet. But that doesn’t mean that going all in on the mania around the company is without risks.
One Redditor I talked to for this story wiped out his savings during the pandemic on risky investments and wound up having to dip into his 401(k) to recover. He subsequently dumped that money into Nvidia, which has paid off. He estimates that about 70% of his liquid assets are in the stock, though its recent declines have made him think twice about that allocation. “It still hurts to see the sharp drop,” he told me. Still, he’s bought in — a few weeks ago, he put a bunch of historical data on Nvidia into ChatGPT and asked it questions about various stock trends and highs and lows, and he felt reassured by the results. “Usually you pay for someone to provide you that data,” he said. He said ChatGPT’s capabilities reinforced his belief in his thesis around Nvidia and AI.
There’s no escaping Nvidia right now. It’s Wall Street’s Elvis or Zack Morris or Taylor Swift or Chappell Roan. The excitement around it is a little bit extra, and even if you want to avoid it, you can’t.
I recently accidentally poked the Nvidia fan bear by slightly making fun of one of the watch parties. People told me not to yuck their yum, said I was being a bummer, called me some names I will not repeat here. I recognize this was not my nicest moment, but you also have to admit that going to a bar to watch an earnings call is a little odd. But then on the day of Nvidia’s earnings, I popped over to a friend’s after work and noticed he had the TV on. I suggested he flip over to CNBC to see what had happened with Nvidia. I’m not a Nvidia true believer, but I’m apparently Nvidia curious.
Emily Stewart is a senior correspondent at Business Insider, writing about business and the economy.
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