Nvidia Loses S&P 500 Top Spot, yet Remains a Top Investment Pick

Key Takeaways

• Vistra has surpassed Nvidia as the S&P 500’s top performer.
• Nvidia’s stock has experienced a significant decline due to concerns about AI, economic conditions, and CEO share sales.
• Despite the recent downturn, analysts remain bullish on Nvidia’s long-term prospects.

The artificial intelligence (AI) giant Nvidia, once the undisputed leader of the S&P 500, has experienced a recent decline in its stock price. This was caused by a recent Department of Justice probe and some concerns about AI advancements.

However, while it has lost its top spot to Vistra, analysts remain optimistic about Nvidia’s long-term prospects.

Nvidia’s No Longer Best S&P 500 Stock

Nvidia (NVDA)  has lost its spot as the S&P 500’s top performer for 2024 to Vistra (VST), a Texas-based electric utility, but analysts remain optimistic about NVDA’s long-term outlook.

Nvidia’s stock has gained 135% in 2024. However, recent concerns over a slowing economy and potential impacts on chip demand have led to a slight correction in its price over the past three months.

In contrast, Vistra has surged by 190% , driven by potential power price increases, higher plant usage, and possible contracts with data centers.

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Analysts expect Vistra’s earnings per share to rise by 8.9% yearly. Strong financial performance, including a 21% return on equity well above the industry average, will support this growth.

Despite Nvidia‘s recent dip, its lower 2025 price-to-earnings-growth ratio compared to its tech peers may indicate that the stock is undervalued, offering the potential for future gains.

Soon after the news that it had lost the crown as the best S&P 500 stock, it closed 4.0% higher on Tuesday, reaching a value per share of $120,87.

What Caused The Pullback

Problems for the AI giant started in early September. Shares of Nvidia plunged by 9.5% on Sept. 3, marking the largest single-day loss in market value for a U.S. company.

The drop, which erased $279 billion from Nvidia’s market capitalization, reflected growing caution among investors about the future of AI technology that has driven much of the year’s stock market surge.

Investor jitters intensified after Nvidia’s recent quarterly forecast fell short of sky-high expectations, dampening enthusiasm around the company.

Adding to the pressure, the U.S. Department of Justice has issued subpoenas to Nvidia as part of an antitrust investigation into the chipmaker following earlier inquiries.

Another factor fueling concern is CEO Jensen Huang’s recent sale of about 6 million Nvidia shares, valued at $713 million. Although the sale was part of a prearranged trading plan, it raised eyebrows among investors already skittish about the stock’s future trajectory.

But Analysts Remain Bullish

Despite the recent decline, analysts remain bullish on Nvidia. Many experts view it as a prime opportunity to invest in the AI sector. Bank of America and Bernstein  have both expressed positive sentiments toward Nvidia. Both cited the Fed rate cuts and the company’s dominant position in the AI chip market.

Other analysts  argue that the Fed’s rate-cutting cycle will provide a tailwind for tech stocks, including Nvidia. They believe that Nvidia’s leading position in AI chips will enable it to capitalize on the substantial spending on AI infrastructure in the coming years. The latter is estimated to reach $1 trillion.

According to analysts  polled by Capital IQ, Nvidia’s average price target is $152.44, with a range of $90 to $200. This suggests significant upside potential for the stock. President Capital recently adjusted its price target for Nvidia from $140 to $152, maintaining a “Buy” rating.

The average target price for NVDA, based on 42 Wall Street analysts’ recommendations , is $152.44.

Projections range from a high of $200.00 to a low of $90.00. This average represents a potential 26% increase from Nvidia’s most recent price of $120.87.

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About the Author

Giuseppe Ciccomascolo

Giuseppe Ciccomascolo began his career as an investigative journalist in Italy, where he contributed to both local and national newspapers, focusing on various financial sectors. Upon relocating to London, he worked as an analyst for Fitch's CapitalStructure and later as a Senior Reporter for Alliance News. In 2017, Giuseppe transitioned to covering cryptocurrency-related news, producing documentaries and articles on Bitcoin and other emerging digital currencies. He also played a pivotal role in establishing the academy for a cryptocurrency exchange website. Crypto remained his primary area of interest throughout his tenure as a writer for ThirdFloor.

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