Discover the Top S&P 500 Stock Outperforming Nvidia in 2024

The Top S&P 500 Stock Surpassing Nvidia in 2024

Despite a recent dip in its share price, Nvidia (NVDA) has had an outstanding year, soaring 154.9% year-to-date. However, one S&P 500 stock has outperformed Nvidia significantly in 2024, making it the top performer of the year.

The Single Stock Beating Nvidia

In 2024, only three stocks in the S&P 500 have seen gains of 100% or more. While Nvidia leads Vistra, which has gained 132.2%, it trails behind the year's top performer: Super Micro Computer (SMCI). Super Micro's shares have surged 196.6% this year, even reaching a staggering 318% increase by mid-March.

Reasons Behind Super Micro’s Success

Super Micro Computer, a leading IT solutions provider, has experienced phenomenal growth over the last decade. A decade ago, the company had a market cap of under $1.2 billion, with $1.16 billion in revenue and $21.3 million in profit. Today, its market cap exceeds $49.3 billion, with projected revenue nearing $15 billion for the fiscal year ending June 30.

The primary driver behind Super Micro's stellar performance is the skyrocketing demand for servers and storage systems fueled by artificial intelligence (AI). The company reported record demand for its AI rack scale direct liquid cooling (DLC) systems, which include Nvidia's H100 GPUs. Super Micro was also the first to market with developments for Nvidia's GH200 (Grace Hopper) and GB200 (Blackwell) platforms.

Super Micro’s inclusion in the S&P 500 index in March significantly boosted its share price, as all mutual funds and ETFs tracking the index had to purchase its shares. However, the stock faced a slight setback when the company announced a public offering of 2 million shares on March 19, diluting the value of existing shares.

Is Super Micro Computer a Smart Investment?

The AI boom shows no signs of slowing down, with Nvidia executives reporting overwhelming demand for their forthcoming Blackwell GPUs. This is a positive indicator for Super Micro's continued growth. While valuation concerns might arise if the demand for AI systems slows, Super Micro’s forward earnings multiple of around 26 is reasonable given its growth prospects.

For aggressive investors with a long-term perspective, Super Micro remains an attractive option. However, cautious investors might consider diversifying their investments.

Conclusion

Super Micro Computer has outpaced Nvidia in 2024 due to its strategic position in the AI-driven server and storage market, strong financial growth, and inclusion in the S&P 500. Despite potential risks, the company’s prospects remain bright, making it a compelling consideration for those looking to capitalize on the AI boom.

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