Amazon, Alphabet, and other internet giants have divided their equities in recent years as their shares rose. A corporation issues more shares to current holders to reduce share prices. This doesn't impact the firm's market value or your investment, but it makes the stock more accessible to more investors, which benefits the company.
For investors, a stock split frequently indicates that a firm is performing well and management expects the momentum to continue, which could boost shares again. It's worth looking at stock-split companies because some may be good long-term investments.
Many split candidates are in high-growth industries and have seen their shares rise to $1,000. This is true for two AI stocks. They haven't announced a breakup, but their recent success makes me expect one soon. Let's examine these AI stocks that may divide.
1. Nvidia Nvidia (NASDAQ: NVDA) stock has risen 500% in the previous three years as the world's AI chip powerhouse. GPUs power AI model training and inference, the most essential steps in any AI project. This lets the models solve difficult issues as desired.
The computer giant's GPUs were originally used for video games and graphics, but CUDA made general computing easy, opening the door to AI. Nvidia now makes most of its money from data centers rather than video games. Revenue and profit increased in the triple digits last year, and since the AI boom is young, growth may continue. Nvidia divided its stock five times, most recently in 2021 after the stock gained. At the time, the shares traded for less than $250.
Nvidia stock has risen beyond $900 this year, approaching $1,000, which may deter investors. This AI star may want to split its stock now because to the stock price and the possibility of a new growth engine. Nvidia stock could soar with the release of its new Blackwell architecture and chips later this year.
2. Super Micro PC Super Micro Computer (NASDAQ: SMCI) has outperformed Nvidia in share performance. Over the previous three years, the stock has risen more than 2,200% and reached $1,000 early this year before falling to $940.
Supermicro, like Nvidia, has seen AI demand change its business stream. The 30-year-old server, complete rack scale, and other equipment maker reported its first $3 billion quarter as AI clients flocked to its products. Supermicro works directly with prominent chipmakers like Nvidia to quickly incorporate new products into its platforms, driving demand to record highs. Supermicro benefits from not only its own new product releases but also the new chip releases from Nvidia, Intel, and Advanced Micro Devices.
Supermicro's building bricks allow it to quickly fill orders and customize items for customers. Supermicro has maximized its economies of scale to maintain its recent earnings growth. The IT giant is expanding production with a new Malaysia facility to reduce costs and increase volume. Supermicro has never split its stock, but now is the moment to do so given its current price and potential for development.
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