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Wait Until You See What Nvidia Just Did To Your Money

Nvidia CEO Jensen Huang's victory lap after the company's latest earnings report didn't simply assuage anxieties about the AI bubble; it also discreetly converted SPY, VOO, and QQQ into high-stakes Nvidia bets for millions of passive investors who didn't want to take the risk of choosing stocks.

Huang said on Fox Business:

Wall Street saw it as proof that the AI boom is far from over.

But Huang's "crazy good" line accomplished something even more extreme. It put an unprecedented amount of retirement money from regular investors into a single chip company via index funds and ETFs that are meant to disperse risk.

Nvidia is no longer only the face of AI. It is the quiet companion in thousands of 401(k)s and brokerage accounts that believe they are secure because they have a lot of index exposure.

Nvidia’s blowout guide calmed AI bubble fears and sent futures soaring.

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The day your "diversified" ETF quietly became a Nvidia trade

Nvidia's stats for the third quarter are quite impressive on their own. Sales rose 62% from the previous year, the first increase in seven quarters. Data center revenue alone reached $51.2 billion, much more than analysts had predicted.

The corporation subsequently said its sales for the fourth quarter of the fiscal year would be $65 billion, plus or minus 2%. This was far higher than Wall Street's estimate of $61.66 billion.

That seems like simply another big quarter in a long line of them.

But here's the thing: Nvidia is now the biggest stock in the S&P 500. Invesco's QQQ (approximately 10%), SPDR S&P 500 ETF, and Vanguard's S&P 500 ETF all own a significant portion, about 8% each.

These ETFs are advertised as basic, diversified building blocks. Nvidia is included in over 673 ETFs in total. This includes focused semiconductor funds, such as VanEck Semiconductor and Strive U.S. Semiconductor ETF.

You're not spreading your money about if you have an S&P 500 tracker, a Nasdaq tracker, a growth ETF, and a chip ETF. You're putting more money into Nvidia.

Your 401(K) is now an AI momentum fund, whether you like it or not

The AI-bubble argument has mostly been about hedge funds, venture capital, and hyperscalers spending billions on GPUs. But Huang's claim that "we're in every cloud" has a second meaning: Nvidia is also in practically every retirement fund that most people have.

Passive funds have to purchase Nvidia when it goes up and its weight increases, and they could have to sell it if it goes down and its weight decreases. Millions of people who never meant to gamble on one high-beta AI name are now riding that mechanical wave.

In practice, that means:

When AI excitement rises and Nvidia jumps, passive strategies focus more on one stock.
Everyday investors may suffer if Nvidia encounters a growth air pocket without a “bubble burst” due to passive flows that boosted the gain.

Huang argues that from where he stands, "we see something very different" than an AI bubble. But now that markets are networked, his point of view and your retirement fund are more closely related than most people think.

When one earnings call jostles the whole market

This quarter's response illustrates how far that connection has gone.

Nvidia's stock had already dropped about 8% in November, even before results were announced. This was after a 1,200% rise over the prior three years. There were more and more doubts about an AI bubble.

Then Nvidia's beat-and-raise print came out, and futures across the board shot up. The S&P 500 futures rose by nearly 1%, tech benchmarks soared, and a long list of chip rivals and big tech names followed Nvidia's lead.

One company's call and set of numbers changed the pricing of risk for an entire asset class.

That's different. We used to think of monthly employment numbers and Fed meetings as big turning points in the economy. Now, Nvidia's results day is beginning to appear like a kind of macro event: a regular stress test for the whole AI-hardware build-out and the passive portfolios that have formed around it.

"We reinvented computing," but did we just break diversification?

Huang summed up Nvidia’s role in almost spiritual terms: “We reinvented computing for the first time in 60, 70 years.” In his telling, the world is only at the beginning of a massive, multi-year upgrade cycle as “all of the computers that have been installed around the world” shift to accelerated computing and AI.

If that vision comes true, Nvidia's "crazy good" projection might be too low, and index investors will be pleased they bought too much.

More Nvidia:

But that's the point: most of them don't know they're overexposed.

For Nvidia's supremacy to stay a clear win for passive investors, a lot of things have to go perfectly at the same time:

Big tech, cloud, and national champions all need to keep investing a lot in AI infrastructure.
Competitors need to keep falling behind so that Nvidia can preserve its margins in the mid-70% level.
Customers and regulators need to be okay with one vendor being close to the core of the AI stack.
The market can't completely change how much it will pay for AI growth.

None of those things are impossible. But when you put them all together, they make a lot of assumptions that are hard to hide in "safe," auto-invested portfolios.

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Wait Until You See What Nvidia Just Did To Your Money

The day your "diversified" ETF quietly became a Nvidia trade

Your 401(K) is now an AI momentum fund, whether you like it or not

When one earnings call jostles the whole market

"We reinvented computing," but did we just break diversification?

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