Nvidia and AI Surprises S&P 500's Best 2024 Performers

The top row or line

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Belle of the Ball Nvidia was the S&P 500's best-performing stock during the first half of 2024, but there were several perhaps less-expected winners as the S&P hit record highs, including a sector that is typically Seen as an underperformance during macroeconomic periods. Today's

Key facts

NvidiaThe 150% year-to-date return to 2024 is the best of the nearly 490 S&P components listed in the entire benchmark U.S. equity index (data storage leader Super Microcomputer, General Electric spin-off GE Vernova and private equity giant KKR were involved in around 10 mid-year additions).

Increasing its market value from $1.2 trillion to more than $3 trillion, Nvidia increased its annual profit by 600% and increased its ability to further leverage its graphics processing units (GPUs) that power the creative AI revolution. holds, and repeats its success as the S&P's top performer. First half and full year winner in 2023.

Super Micro The S&P's top year-to-date return in today's circles is 188%, but all of its gains came before it joined the index on March 18, as its stock is down more than 15% since its inclusion. Is.

After Super Micro and Nvidia, S&P's top 10 also includes fellow AI tech names Micron (No. 7, 55% return) And Crowd strike (No. 9, 51% return), and GLP-1 weight loss drug heavyweight Eli Lilly (No. 5, 57% return).

It's also been a good year for a trio of lesser-known power providers: Vastra (No. 3, 119% return) Constellation energy (No. 4, 73% return) and NRG Energy (No. 8, 52% return).

Constellation, NRG and Vistra are all classified as utilities, providing significant returns in a sector that conventional wisdom says relies on debt financing from utility companies during a high-interest rate environment. , due to its capital outflows as a poor condition for funding its operations.

Management at Constellation, NRG, and Vistra each touted demand for their services among power-hungry AI data centers as a boon for their businesses, an offshoot of the AI ​​boom in the stock market. The effects were revealed.

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Best performing stocks this year

  1. Super Micro, 188% more
  2. Nvidia, up 150%
  3. Visra, 125% more
  4. Constellation Energy, 72% increase
  5. GE Aerospace, up 57 percent
  6. Eli Lilly, up 56 percent
  7. Micron, up 54%
  8. NRG Energy, up 52 percent
  9. Crowd Strike, 50% increase
  10. Targa resources, 50% more

Surprising fact

The S&P's utilities sector is the third-best performer among the index's 13 sectors this year, returning about 11 percent. It's just the information technology sector, which includes Nvidia and Super Micro, and the communications services sector, which covers stocks like Netflix and Meta, both groups of stocks that are heavily influenced by AI.

Key background

Utilities' renaissance came as it posted its biggest loss of 2023 so far, falling 10.6% as the S&P rallied 26%. Interest rates, which are at their highest level in the US since 2001, have squeezed earnings across the sector, such as NextEra Energy's first-quarter earnings before interest, taxes, depreciation and amortization (EBITDA). Compared to the first quarter of 2022, it decreased by about 30 percent. . Higher rates also keep investors away from the high dividend payouts offered by utility companies, as high-yield government bonds offer a higher sense of safety. The stock market has largely defied conventional wisdom that higher interest rates lead to lagging returns, as the S&P, tech-heavy Nasdaq and Dow Jones Industrial Average all hit all-time highs in 2024.

Chief critic

Wells Fargo Investment Institute downgraded its rating on the utility sector in its mid-year outlook published in June. Samir Samana, senior global market strategist at Wells Fargo Wealth Management Division, explained to Forbes that the utilities sector is “on the downside” of industries that will benefit from the second-order effects of the AI ​​boom. Sumana added that it will be years before utility companies can actually provide more power to meet any new demand associated with AI applications, concluding that driving AI is “more direct and more “Quick methods” exist.

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