Investing

Betting big with $75K—should all of it go into NVIDIA or SPY?

Marc Guberti

Published: February 14, 2025 6:14 pm

You can diversify your portfolio and invest in a combination of stocks and ETFs. However, the dollar you put into one investment cannot simultaneously go into another.

Nvidia (NASDAQ:NVDA) is one of the most popular stocks that has delivered significant gains for long-term investors. However, it doesn’t offer as much diversification as the SPDR S&P 500 ETF Trust (NYSEARCA:SPY). If you could only put $75k into Nvidia or SPY, which one would make more sense? I’ll share my thoughts, but it is always good to assess your portfolio.

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Understanding Nvidia Stock’s Value Proposition

Nvidia is in the center of the biggest economic boom we have had in a long time. Artificial intelligence is the foundation for many present and future technologies, and Nvidia chips are the bedrock. While there are other chipmakers in the industry, Nvidia is the overwhelming leader in its competition.

The misguided DeepSeek market reaction has made Nvidia shares more affordable, giving investors the opportunity to realize higher returns when Nvidia stock gets back on track. Nvidia boasts high profit margins and tremendous year-over-year revenue growth. Its fast growth rate also suggests a reasonable valuation at current levels.

Shares have rallied by roughly 80% over the past year and have soared by more than 1,700% over the past five years. While investors shouldn’t expect the $3 trillion company to grow by 1,700% over the next five years, Nvidia can realistically become the world’s first $10 trillion company. Right now, it has a market cap of just over $3 trillion.

Nvidia has many catalysts, but geopolitical tensions can disrupt year-over-year revenue growth. Any slowdowns from big tech spenders can also hurt Nvidia stock, but most of the tech giants have raised their year-over-year AI spending. Any decelerations in this area can also put pressure on Nvidia stock, but AI has a tremendous runway.

Understanding SPY Stock’s Value Proposition

SPY hasn’t kept up with Nvidia, but the ETF gives investors exposure to the 500 largest publicly traded companies. Stocks on the S&P 500 must also be profitable, and the index regularly adds and removes companies based on financial performances and other factors.

You don’t have to monitor individual growth stocks as much since SPY automatically gives you a diversified portfolio. It’s easier to buy SPY than individual growth stocks like Nvidia. Furthermore, SPY offers more insulation during market corrections since it has exposure to many stocks and sectors. However, Nvidia is one of the most vulnerable stocks during corrections that can endure heavy losses during those economic cycles.

SPY is less risky and still delivers respectable growth. The ETF has an annualized 14.3% return over the past five years. It also has an annualized 13.3% return over the past decade, demonstrating remarkable consistency.

Should You Buy NVDA Stock or the SPY ETF?

This decision comes down to your risk tolerance and your time horizon. Nvidia is highly likely to continue outperforming the S&P 500, especially if you have a 5-10 year horizon.

However, Nvidia is a more volatile stock that can endure sharp dips due to company news and macroeconomic trends. The SPY ETF is a better choice for people who are in retirement and want to minimize the amount of volatility in their portfolios. Younger investors who have more time before retirement will likely benefit more from buying Nvidia stock over the SPY ETF.