Is NVIDIA Stock Outperforming the S&P 500?

Santa Clara, California-based NVIDIA Corporation (NVDA) is a key innovator of computer graphics and AI technology. The company provides graphics and compute and networking solutions. With a market cap of $5.1 trillion, NVDA develops a platform for scientific computing, AI, data science, autonomous vehicles, robotics, metaverse, and 3D internet applications.

Companies worth $200 billion or more are generally described as “mega-cap stocks,” and NVDA definitely fits that description, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the semiconductors industry. NVDA is a trailblazer in GPU-accelerated computing, focusing on creating innovative products and platforms for gaming, professional visualization, data center, and automotive industries.

Despite its notable strength, NVDA shares slipped 10.1% from their 52-week high of $236.54, achieved on May 14. Over the past three months, NVDA stock has gained 20%, outperforming the S&P 500 Index’s ($SPX) 9.3% gains during the same time frame.

Shares of NVDA rose 14% on a YTD basis and climbed 56.9% over the past 52 weeks, outperforming SPX’s YTD gains of 9.9% and 27% returns over the last year.

To confirm the bullish trend, NVDA is trading above its 200-day moving average over the past year, with slight fluctuations. It has been trading above its 50-day moving average since early April.

NVDA beat on strong AI infra and data center demand, though the stock dipped 1.8% post-release. Blackwell adoption drove revenue and margins, with Huang calling it the “fastest ramp in our history.” Guidance assumes continued AI build-outs and Vera/VeraRubin CPU launches. The company split Data Center into Hyperscale and ACIE, with sovereign revenue up about 80% year over year across 40 countries. 

Its networking revenue nearly tripled on Spectrum-X demand, and NVDA committed $145 billion to secure supply. NVDA also rallied on “Ising,” quantum AI models that cut calibration from days to hours and beat pyMatching on speed/accuracy. Adoption by IonQ, Inc. (IONQ) and Rigetti Computing, Inc. (RGTI) positions NVDA as the quantum software standard, expanding its moat.

On May 20, NVDA shares closed up by 1.3% after reporting its Q1 results. Its adjusted EPS of $1.87 exceeded Wall Street expectations of $1.77. The company’s revenue was $81.6 billion, topping Wall Street forecasts of $78.8 billion.

NVIDIA’s rival, Advanced Micro Devices, Inc. (AMD) shares has taken the lead over the stock, with a 332.6% uptick over the past 52 weeks and a 131.4% gain on a YTD basis.

Wall Street analysts are bullish on NVDA’s prospects. The stock has a consensus “Strong Buy” rating from the 49 analysts covering it, and the mean price target of $297.11 suggests a potential upside of 39.8% from current price levels.