Retail investors’ most widely held stock on Robinhood is a company known for its groundbreaking innovation in a number of industries.
Roughly three decades ago, the internet began going mainstream and, in the process, democratized access to information and online trading for everyday investors. Rather than wait for public companies to mail their annual reports, investors had access to income statements, balance sheets, investor presentations, and so much more, at the click of a button.
Not surprisingly, retail investors have grown into a larger percentage of total trading volume on Wall Street over time. While institutional/high-frequency trading still accounts for the bulk of shares trading hands on Wall Street on a daily basis, what retail investors think about equities, and which stocks they buy or sell, is of growing importance.
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Online brokerage Robinhood is one trading platform that’s historically catered to everyday investors. What’s particularly interesting about Robinhood is that it continually updates the 100 most-held securities (stocks and exchange-traded funds (ETFs)) on its platform. Think of it as a power ranking of which stocks and ETFs matter most to everyday investors.
In mid-March, artificial intelligence (AI) behemoth Nvidia (NVDA 0.31%) very briefly claimed the top spot as the most-held stock on Robinhood. But in recent weeks, it’s ceded this pedestal to a market-leading business that one prominent money manager believes can return 900% over the next four years.
AI giant Nvidia is no longer the top holding of Robinhood’s retail investors
Though its ascent to the top spot was brief, it’s no surprise that Nvidia recently found itself as the most widely held stock among the retail investing community. Most everyday investors have been caught up in the euphoria surrounding the rise of AI.
Nvidia’s Hopper (H100) graphics processing units (GPUs) and successor Blackwell GPU architecture became overnight sensations. Nvidia’s chips act as the brains of AI-accelerated data centers, allowing for split-second decision-making, as well as the training of large language models. Businesses have been willing to spend a pretty penny to outfit their data centers with Nvidia’s hardware, which has been reflected in the meteoric rise of Nvidia’s stock.
It also doesn’t hurt that no other AI-GPU producers have come particularly close to matching the computing speed of the Hopper or next-generation Blackwell GPU. As long as AI-GPU scarcity persists, Nvidia shouldn’t have any trouble maintaining its superior pricing power.
But there are also logical reasons Nvidia stock fell back to the No. 3 spot on Robinhood’s “most popular” leaderboard.
For instance, every game-changing technology or innovation for more than three decades has worked its way through a bubble early in its expansion. Professional and retail investors consistently overestimate how quickly a new technology will gain utility and widespread adoption, which leads to lofty expectations eventually not being met. Thus far, nothing suggests artificial intelligence stocks will avoid this fate. If the AI bubble were to burst, Nvidia stock would likely be hit hard.
The other significant headwind for Nvidia that some retail investors may have homed in on is its rapidly growing competition. On top of competitors ramping up production, most of Nvidia’s top customers by net sales are internally developing AI chips to use in their data centers. There’s no concern about backlogs with internally developed chips, and they’re notably cheaper than Nvidia’s hardware. This is a recipe for Nvidia’s gross margin to decline.
Image source: Tesla.
Retail investors’ top holding on Robinhood is a Cathie Wood favorite
Which stock replaced Nvidia atop the pedestal? None other than electric-vehicle (EV) giant Tesla (TSLA 5.47%). According to Ark Invest’s Cathie Wood, Tesla stock is headed to $2,600 per share by 2029, which would represent about 903% upside from where the company’s shares ended the first quarter.
Retail investors’ excitement for Tesla can be summed up by three factors.
To begin with, it’s still enjoying some of its first-mover advantages in the EV space. It’s North America’s leading EV maker and became the first auto company in more than a half-century to build itself from the ground up to mass production. With five consecutive years of generally accepted accounting principles (GAAP) profit in its sails, Tesla has demonstrated that its operating model works.
Secondly, Tesla is moving beyond just EV production to improve its margins and lessen its cyclical ties. Orders have picked up in a big way for the company’s energy generation and storage segment. Demand for energy solutions should be consistent in most economic climates. More importantly, the margins for this segment are juicier than those associated with selling EVs.
Lastly, retail investors are enamored with CEO Elon Musk. Tesla’s chief has promised to bring robotaxis to market by June 2025 and believes the company’s Optimus robot represents a jaw-dropping addressable market. Cathie Wood’s $2,600 price target, which implies an $8.37 trillion valuation for Tesla come 2029, is prominently based on stratospheric sales and earnings before interest, taxes, depreciation, and amortization (EBITDA) growth tied to robotaxis.
However, the issue with Tesla, and Cathie Wood’s otherworldly price target on the stock, is that Musk has a long track record of overpromising and underdelivering.
For example, Musk promised that one million robotaxis would be on public roads by 2020. Yet here we are in 2025 discussing the unveiling of a paid robotaxi program in Austin, Texas, come June 2025. Despite more than a decade of annual prognostications by Musk that Level 5 full self-driving was coming “next year,” his company hasn’t moved beyond Level 2 autonomy. If the lofty expectations for unproven claims, which includes robotaxis and Optimus, are backed out of Tesla’s valuation, the stock would lose most of its value.
Beyond Musk being distracted by his work with President Donald Trump and failing to deliver numerous innovations over the last decade, Tesla’s first-mover EV advantages are coming under fire. Growing competition has coerced North America’s leading EV maker to slash its prices on more than a half-dozen occasions to avoid a sizable uptick in inventory. Despite its best efforts, inventory levels did climb, and the company’s vehicle margin plummeted.
Although Tesla has reclaimed its spot as retail investors’ favorite stock on Robinhood, a viable scenario exists where this No. 1 holding vastly underperforms moving forward.
