Aside from artificial intelligence (AI), companies enacting stock splits are the hottest thing on Wall Street.
A stock split allows a publicly traded company to cosmetically alter its share price and outstanding share count while having no impact on its market cap or operating performance. In particular, investors have focused their attention on high-flying stocks with clear-cut competitive advantages that are conducting forward stock splits and making their shares more affordable for everyday investors.
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Unraveling Nvidia's stock-split history
The latest high-profile stock-split stock is none other than AI-titan Nvidia (NVDA -2.02%). However, the company's recent 10-for-1 forward split wasn't its first.
Since its initial public offering (IPO) in January 1999, Nvidia has undergone six forward splits:
- June 2000: 2-for-1 stock split
- September 2001: 2-for-1
- April 2006: 2-for-1
- September 2007: 3-for-2
- July 2021: 4-for-1
- June 2024: 10-for-1
If you owned one share of Nvidia stock at its IPO in January 1999, you'd now hold 480 shares following its latest stock split. That's an increase in market value from $12 at its 1999 IPO to $62,870 in present-day value.
Is the world's hottest AI stock still worth buying?
Nvidia's recipe to success is its in-demand H100 graphics processing units (GPUs), which are the standard in high-compute data centers. Nvidia's top four customers are all members of the "Magnificent Seven."
With AI-GPU demand heavily outpacing supply, the company has had no trouble increasing its prices and boosting its margins.
But becoming Wall Street's latest stock-split stock may not be enough to propel Nvidia's shares higher. History hasn't been kind to next-big-thing innovations. Investors have overestimated the adoption of every new technology for three decades, and AI is unlikely to break that trend.
Nvidia is facing competition from within. Its top customers are all developing their own AI-accelerating chips, which is a clear signal that America's most influential businesses aim to reduce their reliance on AI's top dog.
The sledding is likely to get tougher for Nvidia going forward.
