00:00 Jared
Nvidia out with better than feared earnings, margins holding strong and the stock adding over 200 billion in market cap today alone. But Nvidia isn't just another big tech name, it has become the center of gravity for the entire sector. I'm Jared Blickre, host of Stocks and Translation. Now, check out this first chart. It shows Nvidia's market cap as a percent of major indices over the last decade. Back in 2015, it was a drop in the bucket, less than 1% of US semiconductors. And today, Nvidia is nearly half, 45% of the entire Philly semiconductor index. But interesting quirk here, uh, if you look at the semiconductor ETF, SOXX, Nvidia is only about 10% with Broadcom actually a bigger holding despite a smaller market cap. Similar story for XLK. And now arcane SEC rules dating from the 1940s keep Nvidia's concentration in check to a degree for tradable securities, but it still exerts an outsized influence and let's get back to the chart here. Because zooming out even further, Nvidia is now 20% of large cap tech and 6% of the entire S&P 500. Bottom line, Nvidia now moves the entire market like few stocks ever have. Next chart. This is since October 22. This is the Fed pivot low, which kicked off the current bull market. Nvidia alone has added an incredible $3 trillion in market cap. And it wasn't even a $300 billion company when this rally started. Over that same period, the rest of the S&P 500 sector X Nvidia added $8 trillion, while the entire S&P 500 gained 20 trillion. So when Nvidia moves, the whole market feels it, and that's a lot of market power in just one stock. And here's a different way to to see that influence. In this chart, each bar shows how much market cap Nvidia has added or lost each year, alongside tech and the rest of the S&P 500. Now notice that Nvidia has been up six of the last seven years, including this year, but just barely, adding through May 28th, about $16 billion. But here's the catch. Back in 2022, when tech crashed, Nvidia alone lost nearly $400 billion. Concentration works both ways. And the big question now is what happens if Nvidia stumbles? Remember Cisco in 2000? It dominated the Nasdaq at the.com peak. Then it lost 80% of its value. Index investors were hammered. Bottom line, Nvidia's market dominance isn't just historic, it is a double-edged sword. But with earnings finally in the rear view mirror, a big market risk is finally off the table, for the time being. Tune into Stocks and Translation for more jargon busting deep dives. New episodes on Tuesdays and Thursdays on Yahoo Finances website or wherever you find your podcast.
04:50 Speaker A
Jared, great overview, as always. Thanks so much.
