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As 2024 comes to a close, artificial intelligence (AI) has strengthened its position as a transformative force, not just in technology but also in the financial markets. Investors flocked to securities that reflected the AI revolution and broader economic themes.
The most-bought securities this year are NVIDIA NVDA (hauled in about $29.8 billion), SPDR S&P 500 ETF Trust SPY (about 15.3 billion), Tesla TSLA ($14.7 billion), Invesco QQQ Trust QQQ ($9.8 billion), and Advanced Micro Devices AMD ($9.8 billion), as quoted on CNBC.
Three stocks – NVIDIA, Tesla and AMD are AI plays while Tesla specifically enjoyed the Trump bump this year. Meanwhile, SPY and QQQ ETFs benefitted from the greater presence of “Magnificent Seven” stocks in them.
In a nutshell, the dominance of NVIDIA, SPY, Tesla, QQQ, and AMD underscores a few key themes in 2024 – the AI boom and the resultant tech leadership as well as investors’ search for safety in the form ETF investing. Whether through individual stocks or diversified ETFs, investors have made it clear: in 2024, AI was king.
NVIDIA: The Crown Jewel of AI
NVIDIA stood out as the most-loved security of 2024, amassing nearly $30 billion in net inflows from retail investors. NVDA shares surged over 180%, fueled by its dominance in AI hardware and software solutions. Net inflows for NVIDIA shares have seen a nearly nine-fold jump from 2021, per Vanda data, as quoted on CNBC.
AI Omnipresence: NVIDIA's GPUs became the backbone of AI infrastructure, powering applications from machine learning to generative AI.
Market Leadership: The company joined the elite $3 trillion market cap club and entered the Dow Jones Industrial Average, underscoring its growing influence.
Retail Investor Favorite: NVIDIA's share of the average retail portfolio grew from 5.5% to over 10% in 2024, reflecting widespread belief in its long-term potential.
Despite December's volatility, investors like Genevieve Khoury, who started buying Nvidia in 2022, remain bullish. Note that the SPY ETF was crowned the most-traded security in 2022 and 2021 and earned the second spot in 2023. However, in 2024, NVIDIA claimed the top position, pushing SPY down a notch.
SPDR S&P 500 ETF Trust: A Steady Performer
The SPY ETF, which tracks the S&P 500, remained a constant choice for investors seeking stability in a volatile market. It garnered $15.3 billion in net inflows in 2024, making it the second-most popular security.
Broad Market Exposure: SPY provides a diversified portfolio, offering exposure to the U.S. economy's top 500 companies. Investors were drawn to SPY for its safer yet lucrative exposure, offering a balance between individual stock investments and broad market exposure.