The year 2024 has been all about artificial intelligence (AI), from upgraded chatbots to new AI-powered devices. Everyone is looking to hop on AI’s train to the future, and one company has stood out as the clear winner — American chipmaker Nvidia. Since the beginning of this year, Nvidia’s stock price has surged nearly 500 per cent.
As Nvidia’s stock skyrockets, investors have been making gains, and India, too, has taken a ride in Nvidia’s rally. From direct investment to mutual funds, India has made substantial investments in Nvidia stocks. As per data from Indian market research firm Fisdom Research, over 15 mutual funds in India have jumped on the Nvidia bandwagon. But before we delve into how India is making money from this rally, let’s understand what’s behind Nvidia’s meteoric rise.
Nvidia’s dominance of AI chips
Nvidia doesn’t have any famous AI chatbots like OpenAI’s ChatGPT or Google’s Gemini, but it has what these companies need.
Nvidia makes graphics processing units, or GPUs. These processors are used in computers and data centres. They are most suitable to train AI models. Nvidia is the world’s top manufacturer of data centre processors. These processors are used in AI training. Even ChatGPT is trained using Nvidia’s chips. This has made Nvidia a dominant force in the AI sector.
The stock market has taken note of Nvidia’s market position. At the beginning of this year, Nvidia’s share prices were near $480, and this month, they touched the $1000 mark.
Nvidia’s stock price received its biggest boost after its quarterly earnings in May. The report showed a significant surge in the firm’s profits. This helped its stock price jump over 9 per cent, which further increased the company’s market valuation by a staggering $200 billion, all within a single day.
The firm currently has a market valuation of $2.8 trillion. It is the world’s third-largest firm in terms of market value, just behind Microsoft and Apple.
India’s bet on Nvidia
In India, market investors have not let go of the opportunity to capitalise on Nvidia’s rally. Investors have predominantly used two routes: first, by directly buying Nvidia stocks, and second, by investing in mutual funds with exposure to the U.S. chipmaker.
Now, Nvidia’s stocks are listed on the New York Stock Exchange. To directly buy these stocks, Indian investors have to go through international trading platforms.
Meanwhile, several Indian asset management firms have bought Nvidia’s shares. As of February 2024, India’s 15 mutual funds invested over ₹1,699 crore, or $204 million, in Nvidia stocks, according to data from Indian market research firm Fisdom Research. However, by April, it had risen to nearly ₹2,000 crore, or over $235 million, a jump of $30 million in just two months.
Nvidia’s rally driving Indian AI-stocks
Nvidia’s rally has also helped Indian semiconductor firms. Investors are also looking to gain exposure to Indian firms that are involved in the semiconductor supply chain and AI development.
Indian companies offering AI-linked services have been supercharged by Nvidia’s rise. This includes firms such as Happiest Minds Technologies, Tata Elxsi, Persistent Systems, and L&T Technology Services.
As per analysts, India’s smaller listed companies that work with Nvidia will also likely gain from this rally. These are firms that are connected with Nvidia’s supply chain. They work with the chipmaker to distribute its products in India.
For example, Netweb Technologies partnered with Nvidia last year. It works in the fields of storage, machine learning, and cloud services. The company helps Nvidia with its server designs for its AI processors. Netweb’s shares have surged over 130 per cent in the last six months.
Nvidia’s ties with Indian firms
Nvidia’s influence in India extends far beyond investment opportunities. The company has forged partnerships with many Indian firms, ranging from small startups to established tech giants.
Last year, the American firm inked deals with two of India’s biggest conglomerates, Reliance Industries and Tata Group, to bring AI technology to India.
As Nvidia enjoys its dominance in AI development, India is also leveraging the chipmaker’s gains. While Indians have taken stock positions in the firm, India’s tryst with Nvidia goes beyond merely trading its stocks. From towering conglomerates to new startups, the chipmaker is forging deeper bonds in the country. A diverse array of Indian companies are trying to intertwine their fortunes with Nvidia.
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