Nvidia has jumped 140% year-to-date – and it's done about a quarter of the entire 17% total gain of the S&P 500. In June, Nvidia had an even bigger impact on the index's returns, accounting for over a third of the total returns.

Demand for the company's AI chips is so high, says CEO Jensen Huang is his biggest concern.

Related: Why are Nvidia's earnings so important? They could be a 'market mover', says the expert

Although Nvidia stock may increase further this week if the Federal Reserve lowers interest ratesany increase could also reinforce concerns about the AI ​​giant's undeniable influence on the index and what could happen to the market if demand slows or moves away from Nvidia's AI chips.

^{Nvidia's influence as of June 2024. Graphic by Visual Capitalist via Getty Images}

When Nvidia's stock fluctuates, it obviously affects the broader market; Nvidia's declines accompany declines in the markets in general.

For example, a low point earlier this month disappeared over 10 billion dollars of Nvidia CEO Jensen Huang's personal fortune in one day and over $279 billion of the company's total market capitalization. Nasdaq too fell by 3.3% and the S&P 500 by 2.1% on the day.

In contrast, when shares rose more than 30% during the two weeks ending August 21, Nvidia's market capitalization increased by $750 billion and lifted the Nasdaq by over 7%.

Changes in Nvidia's share price “could affect broader indices such as the Nasdaq 100 and S&P 500, given their strong correlation with Nvidia stock,” said Lukman Otunuga, senior market analyst at online trader FXTM . entrepreneur in an email ahead of Nvidia's second-quarter earnings report in August.

Related: Nvidia CEO Jensen Huang's biggest worry shows that success has a downside

Nvidia's performance has a deeper impact: It affects investors' perceptions of AI demand as a whole. The four companies that make up over 40% of Nvidia's profits are Amazon, Google, Meta and Microsoft — So if Nvidia's profits are up, so is interest in AI parts among major players.

Nvidia posted second-quarter earnings of $16.6 billion last month, beating expectations of $15 billion. It had its own fourth quarter in a row of triple digit growth.

The AI ​​chip maker had one market cap of about $2.866 trillion at the time of writing and was the third largest company by market capitalization in the world.