In Quarter 1 of fiscal year 2024 the infamous two letters “AI” was mentioned on over 40% of S&P 500 companies’ earnings calls. This is unprecedented considering only 1% of companies mentioned AI in their earnings calls just 5 years ago. Much of this buzz has to do with Open AI’s ChatGPT. This highly intelligent AI chatbot is open to everyday people and has become a playground for those interested in artificial intelligence. It is also important to state that the foundation of ChatGPT was built by Nvidia. Nvidia’s AI semiconductor chips are miles ahead their competitors and they command a sort of monopoly on the industry. It is because of this that for one chip they can charge up to $40,000. These expensive chips are so good that companies are lining up to buy them. Nvidia sold over half a million of these chips in Quarter 4 of 2023 alone. It also helps when your biggest clients are the likes of Amazon, Tesla, Google, and Microsoft. As of this writing, Nvidia has the second highest market capitalization in the stock market. Its value is just over $3 trillion, behind only Apple. Considering the company had a market capitalization of only $100 billion just 5 years ago this stock has grown massively. Nvidia was able to achieve this by having amazing days where its stock would go up by 5,10, and sometimes 25%. Conversely, if the stock gets bad news and takes a downward tumble of 10% it could wipe out $300 billion from shareholders. It is unprecedented that a company this big can have such big swings and is the reason the investing community holds its breath whenever it announces its quarterly earnings.

However, this volatility is not exclusive with Nvidia. The industry of Artificial Intelligence is a very volatile one. Many times, if a company shows good long-term prospects in this sector the stock can gain a considerable amount of value in a day. The question that needs to be asked is: does one day of a company’s existence really matter that much? Does it really make sense that just because of some bad numbers a company should be wiped of hundreds-of billions of dollars with a snap of a finger? This is why some of the greatest investors of all time were just that—investors—not speculators, or short-term traders. They looked at long-term prospects and were not being caught up in big price swings. A past example of what we are seeing today would be the tech bubble of 2001. Companies like Apple, Microsoft, and Cisco soared to all-time highs daily because of all the excitement of the internet revolution. Even if you had the foresight to see that Cisco would become a leader in its industry and increase its revenue and all other important financial metrics by many multiples in the next two decades, you would have still lost money because of how over-inflated its price became.

The same is being said today for Nvidia. Even if it’s going to be a big player down the road, will it be worth 3 trillion dollars? Furthermore, who are you to say? With 39 analysts covering the stock backed by the biggest firms in the world with the most advanced trading information and equipment, how could you possibly know better? On any given day some 279 million shares of the stock could trade hands. At a price about $140 this could make your partial share, or even one share seem meaningless. Oftentimes who those who succeed are the people who think critically about what the company actually is. Being cooped up behind a computer for 90 hours a week in a wall street office can only tell you so much. With these firms being given the news before the regular investors it can seem that the investors can’t catch up. What the firms can’t do is look at the impact of companies throughout the country and not just analyze it from their nook. Some of the biggest NVDIA winners were ones who were familiar with the industry and believed in the companies’ prospects. They saw the impact that the company was and could make and made a choice based less from news and numerical data. This is the power that individual investors have and is why in a day and age of mass intelligence and super computers it is still possible to outperform the market.