Nvidia’s stock historically has made dramatic moves in the year after initial Fed interest-rate cuts, and it has outperformed the S&P 500 on average when looking at all rate cuts since the IPO.

Nvidia has led the S&P 500 ( ^GSPC -0.29%) higher this year amid frenetic interest in artificial intelligence (AI). The stock has surged 136% since January, and Wall Street analysts forecast median upside of 30% from the current share price of $115. But betting on a single AI stock is a bad strategy.

Nvidia's huge stock rally is still exerting an outsized influence over the S&P 500 index , reinforcing concerns that broader markets could be hurt if the chipmaking giant's fortunes turn.