In 2024, the US stock market reached new heights, despite a year marked by inflation and election uncertainty. The S&P 500's strong growth was fueled by the AI hype, with Nvidia as the largest contributor. According to data presented by Stocklytics.com, Nvidia contributed more than 22% to the S&P 500's overall return in 2024, far more than any other tech giant in the Magnificent Seven group, which includes Apple, Amazon, Microsoft, Meta, Alphabet, Tesla, and Nvidia.

Being a market-cap-weighted index, the S&P 500 heavily reflects the performance of mega-cap companies. Nvidia, the AI-focused chipmaker, had a fantastic year, with its stock price skyrocketing each time after posting better-than-expected financial results. This helped the company end the year with a massive 171% gain.

The AI giant Nvidia contributed 22.4% to the index's total return, putting it miles ahead of Apple, Microsoft, and Amazon. Apple was the second-largest contributor despite the company's share price increasing by 31%. The tech giant accounted for 7.4% of the index's full-year return, and Microsoft closely followed with a 6.9% share.

Nvidia Outshines Other Tech Giants

Compared to the leading Nvidia, both tech giants had a three times lower share in the S&P 500 Index's 2024 gain. Amazon and Meta had even smaller impacts, accounting for 5.9% and 5.5% of the full-year return, four times less than Nvidia. However, not all tech companies thrived. Intel, for instance, trailed behind the market, with its stock remaining deep in the red zone.

Due to swelling competition, significant manufacturing missteps, and an extended decline in the company's business, Intel stocks plunged by 60% last year, making it the largest negative contributor to the S&P 500's performance, dragging the index down by 1.3%. Other laggards like Adobe, Boeing, and CVS Health also posted double-digit losses but had less impact due to their smaller index weight, pulling the S&P 500 down by just 0.7%, 0.6%, and 0.4%, respectively.

Nvidia's Future Prospects and Challenges

In other news, Nvidia Corp. investors have high hopes that CEO Jensen Huang's speech at the closely-watched CES trade show in Las Vegas will spark a fresh breakout in the chipmaker's shares. Nvidia has typically used the event to showcase consumer devices using its chips. However, investors will focus on any commentary on the Blackwell chip, considered Nvidia's next major growth driver. Despite seeing robust demand, Blackwell has faced supply constraints due in part to manufacturing challenges that have slowed its rollout.

In the stock market, the S&P 500 and Nasdaq Composite pulled back from record highs, with tech shares struggling and investors looking ahead to key inflation data due out this week. Meanwhile, Nvidia shares, which have been on a bumpy ride after the AI chipmaker reported earnings last week that beat the Wall Street consensus but showed that growth is slowing, fell 9.5% on Tuesday.