nvidia (NVDA) 2.54%)) Stock splits are a clear indication of stock strength in the world of artificial intelligence (AI). Its AI accelerator has undoubtedly made it the most important AI stock. Its transformational power across the chip industry has enabled it to replace former industry leader Intel as one of the 30 stocks that make up the Dow Jones Industrial Average. (^dji 0.28%)) November 2024.
But does that mean that investors have grown to the point where they should have expected it to become their next major stock split? Let’s take a closer look.
Nvidia’s recent stock split history
Nvidia stocks benefited from early successes in its history. The company launched its IPO in 1999 at the height of Dot-Com Boom. Even if the bull market conducted its course, Nvidia’s inventory grew steadily, prompting four stock splits between 2000 and 2007.
However, Nvidia peaked in 2007 and fell sharply during the 2008 financial crisis. Stocks began recovering in early 2009, but it took until 2016 for Nvidia to return to its 2007 high.
2016 was when NVIDIA released the GeForce 10 Graphics Processing Unit (GPU), which dramatically improved the quality of virtual reality rendering. This improvement has caught up with Nvidia stock rally, becoming a leader in data center chips and, ultimately, AI accelerators.
In July 2021, large stock earnings prompted a 4-1 stock split. Another stock boom began in October 2022 after Bear Market held the course, accelerated in spring 2023 when investors discovered Nvidia’s AI accelerator was on board. I did. The latest version of chatgpt. The execution resulted in a 1-1 stock split in June 2024.
Between the 2007-2024 stock split, Nvidia rose almost 14,000%!
NVDA data by YCHARTS.
Will there be another split soon?
But among those profits, the outlook for another stock, split in the short term, looks surprisingly dim.
For one, Nvidia has returned a relatively inactive performance since its June 2024 stock split. Since then, inventory has risen by around 15%. Although it closely reflects the S&P 500’s return (^gspc 0.18%))which could disappoint investors who are used to Nvidia’s huge growth over the past decade.
Furthermore, it is unlikely that Nvidia will face pressure to split inventory at this point from S&P Dow Jones Indices, a committee run by S&P Global. The Dow is a price-weighted average, meaning it determines how much the nominal price of a stock affects the index.
Still, only 7 of the 30 shares on the index are on sale because they have a lower nominal share price than NVIDIA. This means that Nvidia is currently one of the less influential stocks on the index, so it’s unlikely to face pressure from S&P Dow Jones. Similarly, splitting stocks reduces the impact on the Dow, making it less likely to begin splitting independently.
Furthermore, one frequently ignored factor divides market capitalization, which is, for some reason, highly unlikely. Its market capitalization will be the second most valuable public shares, next to Apple.
This means that if Nvidia waits for an additional 10 times higher to begin a one-on-one split, it will need to achieve a market capitalization of $34 trillion. With no stocks reaching a $4 trillion market capitalization at the time of this writing, it is unlikely that a $34 trillion market capitalization is at any time in the near future.
Don’t expect a split of Nvidia stocks
Considering Nvidia’s stock, investors should not expect it to become the next stock split, nor should they expect a split in the near future.
Certainly, Nvidia shares have changed the face of the company since the release of GeForce 10. Nevertheless, Nvidia has already dealt with two shares, equivalent to one share in 2016, at nominal price in two splits today.
As a result, Nvidia is currently one of the Dow 30’s low-cost stocks, and due to its large size, another split is very unlikely. Therefore, future stock splits should not be a problem for NVIDIA for a long time or long time.
Wilfey has an Intel position. Motley Fool has jobs at Apple, Intel, Nvidia and S&P Global and recommends. Motley Fool recommends the following options: A short $27 phone with Intel in February 2025. Motley Fools have a disclosure policy.
