Investing

3 Stocks That Could Split After NVIDIA

Eric Bleeker

Published: May 27, 2024 9:23 am

Following NVIDIA‘s (NASDAQ: NVDA) impressive earnings announcement and subsequent 10-for-1 stock split, there is speculation about which companies might announce stock splits next. Recently, companies like Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOGL), and Apple (NASDAQ: AAPL) have seen positive market reactions to stock splits. With NVIDIA continuing this trend (its stock rose 9.3% the day following its stock split announcement), it’s likely this won’t be the last split announcement we see this year.

Let’s look at three stocks that could be the next major stock split announcement.

Microsoft, Broadcom, and Super Micro Computer All Could Split Next

Here are some of the key points touched on from the discussion above between 24/7 Analysts Eric Bleeker and Austin Smith.

• As we predicted on 24/7 Wall Street, NVIDIA would split and announce it in late May, and lo and behold they announced a 10:1 split on May 22.
• NVIDIA’s stock closed up 9.3% the next day – which, partially was beating expectations and commentary about next-generation chip demand. However, there is a pattern among large tech companies and their returns the day after announcing stock splits.
• Here are some returns the day after the most recent stock split announcement from major tech companies:
  • Amazon in March 2022: Up 5%
  • Alphabet in February 2022: Up 8%
  • Apple in July 2020: Up 10%
  • And now you can add NVIDIA’s 9% gain to that list
• See a pattern? Stock splits have been well-received by the market, and announcing one presents little downside. You’ll likely see more companies trading for elevated prices choosing to announce a split in the year ahead. Here are three stocks to watch.
• Microsoft (NASDAQ: MSFT)
  • Trading at $430 per share and a $3.2 trillion market cap, so to hit $500+ per share, Microsoft would need to be a massive $4 trillion-plus company
  • The company does have a history of 2-for-1 splits, but it has been more than 20 years since they announced their last split
  • A 2-for-1 split would get their share price down to $200 to $250
• Broadcom (NASDAQ: AVGO)
  • Trading for around $1,400 per share
  • Splits are a branding exercise, they’re locked in battle with NVIDIA in accelerators and networking. Following after NVIDIA with their own split could get more attention on the stock. Plus, this is one of the most expensive stocks in the market and Broadcom could benefit from added accessibility to retail traders
• Super Micro Computer (NASDAQ: SMCI)
  • We recently outlined the key reasons the stock could be the next to split. Chief among them is the company’s following among retail traders
  • The stock has been trading around $800-$900 per share recently, and positive trends in AI and its stock staying elevated after a drop in April could convince management it’s time for a split

Transcript

Okay, Eric, again, on the heels of NVIDIA’s earnings announcement, there was some really exciting news.

I mean, aside from just all the eye-popping 400% growth, 700% growth, and profit margin growth, NVIDIA shares touched over $1,000.

And as we predicted previously on 24-7 Wall Street, shares announced a split.

NVIDIA announced a 10-for-1 split in addition to their incredible earnings, which of course has us and other investors wondering what stocks could split next.

What do you think?

Yeah.

I mean, 10-for-1 split, as we’ve talked about a lot, stock splits don’t fundamentally change the value of the companies, right?

Instead of having $1,000 with one share, you’ve got 10 shares worth 100.

It’s fundamentally the same, but it’s about how the market’s been reacting to stock splits.

So if we look at technology companies that have recently announced stock splits, I’ve got the numbers right here.

Amazon in March 2022, the next day up 5%.

Alphabet, which is Google, in February 2022, the next day up 8%.

Apple in July 2020, up 10%, and now we can add NVIDIA’s 9% gain to that list.

Austin, I trust you can see the pattern, right?

So, you know, there’s the fact that people like cheaper shares, but there’s the fact this has also been kind of a catalyst for companies.

So who do I see looking towards stock splits in the future?

Well, I’ll start with Microsoft.

It’s trading, as we record this video, at about $427 per share.

That’s at a $3.2 trillion market cap.

So for it to hit $500 plus per share right now, it would need to be almost a $4 trillion company.

But Microsoft has a history of two-for-one stock splits, so it could announce a stock split that gets priced closer to $200 to $250 a share.

I think that’s a very attractive opportunity that Microsoft will have to look at in the next year.

Another stock, Broadcom, trading for nearly $1,400 per share.

Again, stock splits right now, they’re kind of a branding exercise.

They get companies in the news.

And with Broadcom going head to head with NVIDIA and the data center, both with accelerators and networking, them following up with a split of their own would definitely be a very positive PR event.

In addition to the positives that stock splits create, like cheaper shares that are more accessible to retail traders.

And finally, the company I think is most likely to split next, I put this in an article the other day, Super Micro Computer.

It’s trading right now between $800 and $900 a share.

It’s been on an absolute rocket ship recently.

And again, this is a company that, like NVIDIA, is heavily, heavily levered to kind of the AI explosion.

It’s a server maker.

I think they have a big retail following.

So being able to offer a stock split would be particularly attractive to them.

So there you have it, Austin.

I think three stocks that sooner than later are going to be looking at stock splits and with investors seeing the kinds of returns that many of these tech companies have had the day following their stock splits.

You have to think about the ability to split a stock in the current environment, being a catalyst that’s embedded in the shares you own.