Individual investors have long been consistently buying Nvidia (NVDA), making it the largest company by market capitalization in the S&P 500. However, this Wednesday, these investors became net sellers of the stock for the first time since last July. According to Vanda Research, the net selling amounted to just $44.9 million—a mere drop in the bucket compared to Nvidia’s market cap of over $4 trillion. Yet the firm believes this might be a positive signal: retail investors are often the last to retreat, and their exit could instead foreshadow a rebound. Vanda Research wrote in a report that, based on historical patterns, this type of capital flow is typically constructive and positive.
A similar situation occurred on July 2, after which Nvidia’s stock price rose approximately 20% over the following six weeks. The firm suggests this indicates that when retail investors are selling, institutional demand may be stepping in on the other side. That said, the market is not without its concerns. Although the S&P 500 has fallen more than 5% year-to-date, the semiconductor sector as a whole has still posted gains. As the world’s largest company by market cap, Nvidia operates within the semiconductor sector, which carries the heaviest weighting in the S&P 500. A breakdown in this sector would clearly have negative spillover effects on the broader market.
Nevertheless, Vanda Research also sees reason for optimism, as the heavy selling pressure early Wednesday “gradually turned into net buying by the end of the session.” The firm believes that if retail inflows turn positive again on Thursday, it could signal “a resurgence of animal spirits” in the market. Unfortunately, technology stocks continued to face selling pressure on Thursday, with Nvidia closing down 4.16%.
Looking back, Nvidia’s leadership in artificial intelligence has yielded enormous returns. The company dominates the AI chip market, sells the most powerful graphics processing units (GPUs), and has built a comprehensive portfolio of AI products and services. Recently, Nvidia released the NemoClaw system, designed to help users more safely operate the popular AI agent OpenClaw. At the same time, the company has followed through on its commitment to annual chip updates, having launched the Blackwell and Blackwell Ultra platforms, with plans to introduce the Vera Rubin platform later this year. These initiatives have maintained the loyalty of top-tier tech clients, enabling Nvidia to achieve remarkable growth, with revenue exceeding $215 billion in its latest fiscal year and gross margins generally above 70% in recent periods.
Although Nvidia’s stock price has shown some weakness in recent months—amid investor skepticism about the sustainability of AI spending and headwinds such as geopolitical factors—historical patterns may offer some insight. Over the past three years, Nvidia’s stock has posted double-digit gains in the second quarter each time: a 52% increase in the same period of 2023, 36% in 2024, and 45% last year. Based solely on historical data, the stock could be poised for a surge in the coming three months. Of course, any company-, industry-, geopolitical-, or economy-related news could disrupt this market dynamic. Nonetheless, this AI leader still holds growth potential and a complete AI product portfolio, positioning it to deliver substantial long-term returns.
