Chip Index Doubles in 2024 Even as Nvidia Lands at the Bottom
A major semiconductor index has surged 100% this year, yet Nvidia — its largest component — ranks last among its peers.
A closely watched semiconductor index has doubled in value this year, a remarkable rally that unfolded even as Nvidia, the sector's most prominent name, finished dead last among its components in terms of relative performance. The divergence signals a broadening in the chip sector that analysts say has been building throughout 2024 as investors looked beyond the artificial-intelligence darling toward other chipmakers posting stronger percentage gains.
Nvidia's underperformance within the index is partly a function of its own success. The company has grown so dominant and so richly valued that clearing the bar analysts and investors set for it has become increasingly difficult. As one analyst put it, "Nvidia has gotten so large that its ability to beat expectations has gotten much smaller" — a dynamic that tends to cap a stock's upside even when underlying business results remain strong.
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The situation illustrates a well-known market phenomenon: mega-cap stocks that drive an index higher in earlier stages of a rally often give way to smaller, faster-moving names once momentum broadens. For semiconductor investors, that rotation appears to be playing out in real time, with mid-tier chipmakers capturing gains that Nvidia's sheer size and lofty expectations made harder to replicate.
The doubling of the chip index nonetheless underscores the enduring investor conviction that demand for semiconductors — driven by AI infrastructure buildout, data centers, and consumer electronics — remains structurally robust. Nvidia may be lagging its index peers on a relative basis, but the sector as a whole has delivered one of the standout performances across all of Wall Street this year.
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