The stock market has recently witnessed a significant shift in momentum, with NVIDIA overtaking Tesla as the most favored stock among retail investors in 2023. This trend underscores a broader movement, as the net purchases of NVIDIA shares have surpassed those of the S&P 500 ETF for the second consecutive year, indicating an ongoing fascination with tech stocksThe relentless advancements in artificial intelligence (AI) raise the question: can this trend be sustained into 2025, and who will rise to the forefront in this tech-driven landscape?

Over the past three years, the buying interest in NVIDIA has increased dramatically—by as much as nine timesThis year alone, the net inflow of funds into NVIDIA stock has almost doubled compared to its performance in 2022, reaching an impressive $29.8 billionTo put this into perspective, that figure is nearly nine times what was seen in 2021. Marco Iachini, a senior vice president at Vanda Research, noted that NVIDIA has overshadowed Tesla in terms of investor sentiment, citing the remarkable price surge of NVIDIA shares.

NVIDIA's stock has skyrocketed by over 180% in 2024, marking a massive increase in its market capitalization, which crossed the $3 trillion milestone

For a brief period, NVIDIA also claimed the title of the most valuable company globally, surpassing giants like AppleThis surge in stock price is driven in part by retail investors, who have significantly increased their holdingsData from Vanda indicates that NVIDIA constitutes more than 10% of the typical retail investor's portfolio, a notable rise from 5.5% at the beginning of 2024. Currently, it stands as the second most held stock among retail investors, trailing only Tesla.

Globally renowned investment bank D.ADavidson's head of technology research, Gil Luria, acknowledged that the burgeoning presence of retail investors in the shareholder base is a key factor in NVIDIA's stock performanceThe volatility exhibited by NVIDIA's stock price has been striking; Brian Colello, a stock strategist at Morningstar, emphasized the extent to which retail investors can influence stock prices, noting that significant fluctuations in share price are commonplace for a company of NVIDIA's scale.

As NVIDIA's market cap continues to rise, it has become the focal point of Wall Street's earnings season, eclipsing even Apple

• Sungrow Rises as the New King of Solar Power
• Suteng Juchuang Loses HKD 55 Billion in Market Value
• Abundant Liquidity Despite MLF Tapering
• Huawei, Baidu Double Down on Digital Tech
• Hong Kong IPO Market Remains Vibrant

Analysts are predicting a median volatility of over 5% in NVIDIA's market cap leading up to earnings announcements—an atypical trend among star tech stocks, reflecting the strong market enthusiasm surrounding the company.

NVIDIA has firmly positioned itself as a leader in the AI technology sector, with graphics processing units (GPUs) serving as a cornerstone for various applicationsCEO Jensen Huang has reiterated that NVIDIA's next flagship AI chip, Blackwell, has commenced production and is experiencing severe demand outstripping supplyThe company's technological innovations span multiple fields, from healthcare to autonomous vehicles, and many analysts believe that as more industries integrate its groundbreaking technology, NVIDIA's role within the tech ecosystem will only expand and strengthen.

However, the competitive landscape is evolving, with NVIDIA facing challenges as its valuation advantage relative to some rivals begins to narrow

Recently, Broadcom joined the exclusive club of U.Scompanies boasting a market cap exceeding $1 trillionAnalysts forecast a strong demand for custom AI chips, with estimates ranging from $60 billion to $90 billion in the market by 2027.

Data compiled by the London Stock Exchange Group (LSEG) reveals Broadcom's 12-month forward price-to-earnings ratio stands at 29.8, which is lower than NVIDIA's ratio of 31.03. According to Thomas Hayes, chairman of Great Hill Capital, as the industry shifts focus from model training to real-world AI application, the competition will heat up, with more chip companies catching up to NVIDIALuria mentioned that although NVIDIA's earnings continue to exceed Wall Street's forecasts, these results may not be sufficient to sustain the rapid appreciation of its stock price; it has now reached a more "balanced" valuation level.

Looking ahead, one software company, in particular, may emerge as a significant player

Iachini pointed out Palantir, a software firm specializing in big data analytics, which garnered attention in the retail market this quarter and seems poised to become a hot choice for the upcoming year.

Palantir has experienced a meteoric rise this year, focusing on AI and data, powered by its ontology engine and highly customizable capabilitiesThe company has recently been included in both the Nasdaq and S&P 500 indices, witnessing its stock price swell by nearly 380%, making it one of the best-performing components of the S&P indexIn Vanda’s rankings, Palantir ranks ninth in terms of net buy volume, surpassing even industry giants like Amazon, Google, and Microsoft.

Notably, Palantir's CEO, Alex Karp, recently aired a video thanking retail investors for their support, saying, "I sincerely thank all you individual investors for having the courage to move beyond the conventional, rusty, and rigid clichés of the market.” His expression of gratitude is indicative of a broader trend where retail investors are being recognized for their ability to impact markets traditionally dominated by institutional players.