Investing

Prediction: Nvidia Will Split Its Stock Again, Sooner Than You Think

Chris MacDonald

Published: October 30, 2024 9:15 am

Last Updated: October 30, 2024 4:45 pm

Many long-term investors in Nvidia (NASDAQ:NVDA) may have noticed a trend forming with this particular stock. As Nvidia continues to soar to new all-time highs, the company continues to split its stock, to avoid having the company’s share price shoot to astronomical levels. This is a trend we’re seeing in a number of high-growth stocks, with a number of benefits accrued to both the company and investors as a result.

As many investors are already well aware, a stock split does not change anything from a fundamental perspective when it comes to a given company. Rather, these splits simply divide the company up into smaller pieces, akin to slicing a pizza or pie again and again.

But for companies like Nvidia that compensate many of their employees with stock, being able to do so at lower share prices can be beneficial in terms of offering more precise compensation packages. And for investors, being able to buy full shares of a given stock can be a good thing, broadening out Nvidia’s investor base and making options much more attainable for those looking to trade this stock.

Here’s why I think NVDA stock, which currently trades around its all-time high at roughly $145 per share, could see another stock split on the horizon sooner than many think.

Key Points About This Article:

• Nvidia’s recent surge has positioned this stock as a potential stock split once again, with NVDA stock pushing to new all-time highs.
• Here’s why it’s entirely possible this AI chip maker could split its stock once again, and sooner than many think.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Big Stock Split in June

Nvidia undertook a highly anticipated 10-for-1 stock split on June 7, 2024. This 10-for-1 stock split effectively gave investors 10 shares of NVDA stock for every 1 owned, taking the company’s stock price from around $1,200 per share to around $120 apiece. Again, this move was a mathematical one and changing the share count has no fundamental effect on the company, but the stock rallied following this move, before consolidating later in August and again in September as China-related tariff news and concerns around overall orders in this sector (courtesy of ASML earnings) took the stock on brief dips. But since these small blips, the stock has once again continued to move higher as investors largely view Nvidia as the premier way to play the AI race. 

One of the key determinants of another potential stock split would be a significant run up in Nvidia’s share price. I’ve previously called for $150 per share by next year, but if this rally continues, it’s entirely possible Nvidia could blow through that level, and then some. My view is that a 2-for-1 split could certainly take place if Nvidia heads toward the $200 level, with the company clearly targeting a stock price that’s closer to the $100 level than not, though this chip maker has taken its time and waited for previous splits, so we’ll see.

The higher Nvidia stock goes, the greater incentive management has to increase its share count and provide liquidity to employees and smaller investors.

Why Investors Should Pay Close Attention to This Chip Stock

Nvidia faces growth challenges, including delayed Blackwell GPU launches, export restrictions, and rising competition. Some U.S. customers in the hyper scaler space have announced plans to develop their own chips internally, and that’s certainly something to keep an eye on. But for now at least, the company’s Blackwell GPU sales are expected to ramp up considerably, with the market pricing in significant top and bottom line impacts from additional chip lines.

It’s true that Nvidia is among the most highly-valued stocks in the market right now. But that’s for good reason – triple-digit revenue growth with plenty of growth drivers on the horizon will bring about such a valuation surge.

The question many investors have is whether the company’s upcoming earnings in fiscal 2025 will live up to the hype. And while plenty of analysts have raised their estimates for Nvidia’s earnings over the next year to five years, it’s also true that measuring future demand for the company’s chips may be harder than thought. This is a company that’s clearly seen a tremendous amount of demand pulled forward, but it’s also possible that future demand could be much more vast than many bears think.

Over the long-term, Nvidia has proven to be a stock that has hurt short sellers and bears. If that trend continues, the company could indeed split its shares once again, and not wait years to do so.

Will Nvidia Really Split Its Stock Again?

I’m not sure if we’re going to see another split over the course of the next 12 months, but we’ll have to ultimately see how Nvidia’s stock price performs over this time frame. I think if we do get another year similar to 2024, a split could be entirely on the table before the end of 2025. But I also think that would be a tall ask, even for Nvidia. The company has some incredibly high bars to pole vault over in the coming quarterly earnings to be able to justify even higher valuations.

I’m of the view that Nvidia is simply one of those stocks that’s very difficult to forecast. This reality has made a lot of investors who have simply stuck with this name very wealthy. Again, this is one AI name that’s very difficult to bet against, even when it looks like there’s some sort of downtrend forming.