Thinking about buying Nvidia stock? Here’s why you might already own it

By now, you’ve probably heard all about NVIDIA Corporation (NASDAQ: NVDA) stock and its prowess and future potential in artificial intelligence (AI). You’ve probably also caught wind of its mind-boggling stock price gains that its lucky investors have been enjoying.

To put some numbers on it, the Nvidia share price has gained an eye-watering 181.46% over 2024 to date alone (going off the stock price as of Wednesday night’s close).

Over the past 12 months, investors have netted a rise of 209.47%, which stretches to a monstrous 3,477% over the past five years.

These gains have even been enough to push Nvidia to claim the title of ‘world’s largest company’. Yes, just this week, Nvidia surpassed Microsoft to take that crown. At the time of writing, it commanded a jaw-dropping market capitalisation of US$3.34 trillion. For some context, that’s more than the size of the entire Australian economy. Nearly twice over, in fact.

So this is a stock that has no doubt changed the lives of more than a few investors. If you don’t already own shares and you’re a sucker for punishment, check out the graph below for a graphical representation of this company’s astonishing ascendancy:

With such a dramatic and usual rocketship-like trajectory, Nvidia stock is bound to give most of us at least some feelings of missing out. That’s if you don’t already own shares of course.

However, before you rush out and buy Nvidia, there’s something important to consider. Chances are you’re probably already an owner of Nvidia shares. In fact, most Australians can probably claim they own a small piece of this company, whether they know it or not.

How?

Why most Australians own a slice of Nvidia stock… even if they don’t know it

Well, Nvidia’s rise has had some auxiliary consequences. For one, it has pushed the allocation that many index funds and exchange-traded funds (ETFs) have to Nvidia stock. Because these funds give weighting to different companies based on market capitalisation, Nvidia’s rise means that any index fund that already included Nvidia needs to raise its allocation to this stock proportionately

To illustrate, buying a popular US-based ETF like the iShares S&P 500 ETF (ASX: IVV) today will mean that out of every dollar invested, 7.3 cents will go into Nvidia shares.

So any ASX investor who owns any ETF or index fund that holds international or US shares probably has exposure to Nvidia stock right now.

But so would most Australians with a superannuation fund. That is to say, the vast majority of the adult population in this country.

Most Australian workers have their super invested in what’s known as a ‘balanced’ fund. It’s called this because the fund aims to invest in a variety of asset classes in order to balance the maximisation of your financial returns with reducing fund volatility. These asset classes usually include ASX shares, infrastructure, cash, bonds, property, and international shares.

Chances are one of the international shares in your super fund’s portfolio will be Nvidia. Given that Nvidia has been one of the top ten shares in the US market by size for a few years now, it is highly likely that your super fund has a position in the company.

If your super fund has grown in value over the past 12 months, you can probably partly thank Nvidia for that too. This scenario just goes to show how beneficial superannuation can be for everyone in the country today.

Foolish takeaway

Watching a stock like Nvidia explode in value from the sidelines might be hard. But we should all take comfort from the fact that almost everyone is benefitting from its rise, even in an indirect and relatively modest manner.

The post Thinking about buying Nvidia stock? Here’s why you might already own it appeared first on The Motley Fool Australia.

More reading

• Nvidia investors just got some bullish news
• Is Nvidia stock going to $200 in the wake of its 10-for-1 stock split?
• Can anyone topple Nvidia as the king of artificial intelligence investments?
• We see patterns everywhere. That’s not always helpful.
• Nvidia shares reach world’s most valuable milestone. Where to now?

Motley Fool contributor Sebastian Bowen has positions in Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.