• Nvidia is overtaking Tesla as the most traded stock on Wall Street, signalling the increasing importance of AI-related investments to investors.
  • However, concerns arise over Nvidia’s ability to meet high revenue expectations, potentially reversing its 47% surge in 2024.
  • Despite Nvidia’s dominance in the AI chip market and soaring market value, Tesla’s stock has dropped 20% due to subdued electric car demand and heightened competition.

Chip maker Nvidia is replacing Tesla as the most heavily traded stock on Wall Street, further bolstering its position after becoming the third-largest U.S. market value company and showing more evidence that bets on artificial intelligence have become core to investors.
If Nvidia’s revenue growth fails to meet investors’ lofty expectations and dampens the Wall Street rally driven by AI excitement, then Nvidia’s massive representation in daily stock trading could leave investors more vulnerable.

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Nvidia’s stock price surge may reverse in 2024

The quarterly report released by the California-based chip maker on Wednesday will be one of Wall Street’s most closely watched events this week. Some strategists believe that without a blockbuster report, Nvidia’s stock price surge of 47% in 2024 could be reversed.

Over the past 30 trading days, Nvidia’s stock has turned over an average of about $30 billion per day, surpassing Elon Musk’s electric car maker, which averaged $22 billion per day during the same period.Data from the London Stock Exchange shows that since 2020, Tesla has been dominating the daily trading of U.S. stocks, with turnover (stock price multiplied by the number of shares traded) reaching peaks of over $35 billion several times in recent years.

On Friday, the merger of Nvidia and another company benefiting from the AI boom, Advanced Micro Devices, accounted for more than 40% of the total trading volume of the 10 largest stocks in the United States, including Tesla, Meta Platforms, Apple, Amazon, and Microsoft.

Some people believe it is the dawn of the internet

Dennis Dick, a trader at Triple D Trading in Ontario, Canada, said some people believe this is the dawn of a new trading era, much like the dawn of the internet, with Nvidia in the lead.

But Dick also warned that the extremely high trading volume of AI-related stocks indicates that retail investors and algorithmic traders are pushing up stock prices based on momentum rather than fundamentals (such as expectations for future revenue growth).

Advanced Micro Devices, which sells AI-related server components to Nvidia, has more than doubled in value to $45 billion as of 2024. After Wells Fargo started giving the stock an equal-weight rating, the company fell 20% from its historic high on Friday, saying its valuation is now below strong upward potential.

Nvidia controls about 80% of the high-end AI chip market, and last week its market value surpassed that of Amazon and Alphabet, making it the third-largest market value company on Wall Street, behind only Microsoft and Apple. Nvidia’s market value has soared from $540 billion a year ago to $1.8 trillion.

Meanwhile, Tesla’s stock has fallen 20% since 2024 due to weak demand for electric cars and intensifying competition.