Over the past couple of years, whether or not you’ve been involved in the stock market, you’ve likely heard of Nvidia. Aside from its consistently rising stock prices, it’s also recognized as a leading driver in the future of the AI industry.
If you’re already investing in VOO, you might be curious if it is a better option, especially given its recent strong performance, which could spark some interest.
So, as an investor in both, allow me to share the three most notable observations I’ve had recently to answer the question of which one is better.
Nvidia is making more profit than VOO, which is a bit gut-wrenching
The most significant observation I’ve had to date is that it is earning faster than VOO, which really makes me feel gutted.
As of the day of writing, it has more than doubled in value among all my holdings, while VOO has only accumulated around a 12% return.
Of course, you could argue that this might be due to the timing of my purchases.
But you will be surprised more when comparing them together（from Yahoo!Finance）：
So, with such a significant increase, you might think I’ve made a fortune, right?
I’m sorry, but no. Despite the substantial increase, it only represents about 2.3% of my overall portfolio:
“If only I had known it would rise so much, I would have bought more!!!” This is the biggest takeaway so far.
Nvidia serves not only as a trailblazer for VOO but also as its leading indicator
However, even though I hold relatively little Nvidia, it still indirectly contributes significantly to the investment returns I’ve garnered.
If calculated based on the closing price on March 7, 2024, its weighting is nearly 5%, almost surpassing that of Apple.（From Slicksharts）：
This also means that even if you don’t directly hold Nvidia, as long as its stock price continues to rise, it will increase its weight and thus drive the performance of VOO.
Moreover, from another perspective, Nvidia serves as a leading indicator, prompting other industry leaders to move towards AI. A recent example is Apple abandoning its electric car development and instead investing in generative AI applications, while Microsoft has long been collaborating with Open AI to apply relevant technologies to its Edge browser.
Looking further ahead, the application of AI can not only drive higher productivity but also develop various related industries, expanding business scale and potential profits, thereby driving the long-term stock price development of VOO.
Therefore, in my personal interpretation, Nvidia’s surge is just another starting point for the evolution of a new industry, not only leading the rise of VOO but also serving as a leading indicator for the component industries.
In the long run, VOO is still easier to hold onto
Although I regret holding relatively less Nvidia, taking a moment to calm down, VOO remains my stable long-term investment choice.
Returning to the upward trend chart just shared, even though Nvidia has surged nearly 90% this year, its actual risk is also the greatest. Any slight disturbance could potentially result in a drop of 5% to 10%, as we saw on March 8, 2024, with the closing price dropping by 5%. For someone with a lower risk tolerance like me, it’s hard on the heart.
Moreover, can Nvidia maintain this advantage in the long term? No one can say for sure.
Therefore, even if Nvidia falters one day, VOO will still be there, providing me with a bit more peace of mind.
So, is Nvidia better than VOO?
Returning to the initial question, is Nvidia better than VOO?
My personal answer is “no“.
The main reason, as mentioned earlier, is that you cannot confirm whether Nvidia will continue to maintain its current advantage in the future. Moreover, even if it falters one day, VOO will still be there, silently observing.
In the short term, I may regret not holding enough Nvidia and earning less, but from a long-term perspective, VOO will undoubtedly be a better choice than Nvidia. After all, Nvidia will inevitably have its downhill days, but VOO won’t.