Since ChatGPT was introduced in 2023, the term AI has almost become ubiquitous in our lives, especially with the unveiling of Sora in 2024, which has elevated everyone’s imagination of AI applications to another level. Behind this phenomenon, Nvidia has been one of the driving forces, as evidenced by its surge in value from 2023 to 2024.
However, have you ever wondered if you can participate in this AI boom by investing in VOO, especially if you’re hesitant to chase after Nvidia?
Therefore, I’ll first briefly explain the relationship between Nvidia and AI, and then address whether it’s possible to participate in this trend by investing in VOO. If so, I’ll discuss the advantages of doing so.
What is the relationship between Nvidia and AI, and why is it so popular?
First, let’s briefly introduce the relationship between Nvidia and AI.
The generation of AI relies on machines continuously learning and computing, with the computations behind it being quite complex. Therefore, it requires a large number of GPUs (Graphics Processing Units) to process.
Nvidia, renowned for its graphics cards, produces GPUs that are perfectly suited to the development of AI. Consequently, when people talk about AI, they often think of Nvidia.
Looking ahead, generative AI will be widely used across various industries, leading to a gradual increase in demand in the future. This presents Nvidia with a rare and valuable opportunity.
So VOO will be involved in this AI wave?
Can you get in on this AI craze through VOO?
Absolutely!
If you take a close look at the latest top ten constituents of the S&P 500, you’ll find that Nvidia has already climbed to the third spot, with a weight nearing 5% (data compiled from Slicksharts, as of April 12, 2024):
Although Nvidia itself doesn’t have a high weighting, other companies like Microsoft, Apple, Amazon, Facebook, Google, and others have all been drawn into this craze and are actively investing in this field. Therefore, VOO can also benefit from this trend.
What are the advantages by doing this?
What are the advantages by doing this?
By participating in the AI craze through VOO, you can enjoy these advantages:
It can be more assured and safer.
By participating through VOO, you can be more assured and safer.
If we directly compare the volatility of VOO and Nvidia over the past decade, you’ll find that Nvidia’s volatility is noticeably higher than VOO’s (screenshot from Portfolio Lab, as shown below):
Furthermore, when we examine the cumulative decline from each’s recent peaks over the past decade, you’ll notice that Nvidia’s potential declines are quite significant, with three instances of declines exceeding 30%:
Conversely, whether in terms of volatility or potential decline, VOO is lower than Nvidia, making it more suitable for us to hold it for the long term and participate in this trend with peace of mind.
Stimulating other tech companies to participate, pursuing higher profits.
The development of AI not only affects Nvidia but also tech giants like Microsoft, Apple, Amazon, Facebook, and Google, all of which have joined the fray.
Aside from Microsoft’s acquisition of Open AI for integration into its own products, Amazon has applied AI technology to its AWS cloud services, while Google has shown its competitive spirit by developing Gemini to rival ChatGPT.
Even Apple has abandoned its decade-long development of electric cars to focus all resources on AI.
When you see these giants making such moves, it’s easy to imagine the potential benefits behind them.
As long as these benefits persist, they will continue to propel the growth potential of VOO.
The future impact extends to all industries, with great potential for profit.
The influence of AI, in my opinion, will expand to various industries in just a few years.
While the current impact is primarily concentrated in the tech sector, once these technologies mature, they can be applied across major industries such as healthcare, food and beverage, travel, publishing, transportation, education, and more, creating greater value.
Therefore, by investing in VOO, you can also participate in this process and enjoy larger growth opportunities.