Another day, another 10:1 stock split in this new generative AI paradigm. Most recently, Broadcom (Nasdaq: AVGO) has announced a 10:1 forward stock split of its shares, taking a page out of tech peer Nvidia’s (Nasdaq: NVDA) book and giving investors something to cheer in an otherwise uncertain market environment. The split is the first of its kind since Broadcom combined with Avago Technologies in 2016. In response, tech stocks led by Broadcom catapulted the S&P 500 and Nasdaq closer to new record territory but both indexes are bouncing around.

Details of the split were tucked into Broadcom’s Q2 report, revealing that trading on a split-adjusted basis will begin on July 15. Broadcom’s plan worked like a charm as it sent shares of AVGO soaring by approximately 13% in response. If Nvidia’s post-split performance is any indication, Broadcom stock is just getting started and could jump as much as 30% by the time its stock split is complete, incentivizing both short-term and long-term investors alike. Investors have already indicated their willingness to reward companies whose management teams exhibit the type of confidence that matches their bullish expectations.

Nvidia’s Stock Split Journey

When Nvidia announced its massive 10:1 stock split last month, shares were trading at approximately $949 each. By splitting the stock, shares were lowered to a much more approachable $94 level, making it possible for more mainstream investors to buy it. While investors didn’t need much coaxing to jump in, given the company’s dominant position in the generative AI race, they interpreted Nvidia’s stock split as a bullish sign, catapulting the company to a $3 trillion market cap a couple of days before the split was completed. With a $779 billion market cap today, Broadcom’s stock could be knocking on the door of $2,000 before its 10:1 split is done.

Broadcom’s Bullish Message

Broadcom’s upcoming 10:1 stock split will “will proportionately increase the authorized shares of common stock,” according to the company. While Broadcom’s management might have been inspired by Nvidia, the split is justified. AVGO shares have ballooned by 52% year to date and are up a an even more impressive 94% in the past 12 months. Besides the Broadcom’s 10:1 stock split will not affect the value of investors’ holdings or the company’s value. Instead, it will bring the share price down to a much more approachable level for individual investors as well as employees who are looking to ride the generative AI wave.

Broadcom’s performance continues to reflect robust AI demand, with revenue from its AI solutions reaching an all-time high of $3.1 billion in Q2. Management announced the split alongside an improved outlook and is now calling for full-year consolidated revenue of $51 billion and adjusted EBITDA to be 61% of revenue.

Broadcom CEO Hock Tan also helped to fuel the rally in AVGO stock when he revealed that fiscal-year AI revenue is now forecast at $11 billion, up from previous expectations for $10 billion. Based on the company outlook, AI-fueled revenue will comprise more than 20% of Broadcom’s total revenue pie this fiscal year ended October. The company’s other bright spot is VMWare.

Wall Street analysts are already reassessing their outlooks on the stock, including Cantor Fitzgerald’s C.J. Muse, who is also a NVDA bull and who who increased his AVGO price target to $1875 per share, reflecting another 11% upside potential and bringing the stock to Nvidia’s split-fueled gains.

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