Indians scurrying to hoard Nvidia shares as everyone buying shovel-makers in AI gold rush
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Volumes have doubled month-on-month and last week it was crowned as the No. 1 trending stock by number of users and volumes on Vested Finance. The average trading volume per user is almost 5x in February 2024 compared to February 2023, said Viram Shah, CEO, Vested Finance.
Monthly trading volume on Vested is 2x of what it was in 2021 but that is largely due to more participants from India in the US markets, he said.
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Last week, Nvidia’s market capitalisation crossed the $2 trillion milestone for a brief period and is now valued more than giants like Amazon and Alphabet. On Wall Street, it is the third most valued stock after Apple ($2.8 trillion) and Microsoft (3 trillion).
The sharp rally in Nvidia follows the popularity of the famous business principle of selling picks and shovels in a gold rush. Riding on a boom in generative artificial intelligence worldwide, Nvidia is selling the shovel equivalent of chips in the AI gold rush. Nvidia’s chips are used by almost all generative AI players from ChatGPT-maker OpenAI to Google.As a result, Nvidia shares have surged nearly 60% this year, after more than tripling in value in 2023.Despite the share surge, Nvidia’s valuation has fallen due to rapid increases in analysts’ estimates. It has a 12-month forward price-to-earnings ratio of about 31, down from 49 times a year ago, according to LSEG data.
Besides direct investors from India, some of the country’s mutual funds too are invested in the sizzling beauty. Calculations done by Fisdom shows that Indian AMCs have an exposure of around Rs 1,700 crore in the chipmaker. Most of them are passive funds as only two – Axis Special Situations Fund and Axis Growth Opportunities Fund – active funds.
Motilal Oswal had the highest exposure of around Rs 439 crore in Nvidia. Mirae Asset Mutual Fund and Franklin Templeton Mutual Fund had exposure of around Rs 200 crore, January month data shows.
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