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The stock market is red.of S&P500 The number exceeded 5,000 for the first time in history.of Dow Jones Industrial Average It regularly updates all-time highs.
on the other hand, Nasdaq CompositeThe most high-tech of the major indexes is riding a wave of artificial intelligence (AI) optimism into the stratosphere. Over the past 12 months, the index has risen 33%.
With so many new highs being set, some stocks have reached towering highs. So let’s talk stock splits and talk about three stocks — wonderful micro computer (SMCI -19.99%), Nvidia (NVDA -0.06%)and meta platform (meta -2.21%) –Ready.
Image source: Getty Images.
The hottest AI stocks appear poised for first-ever split
Jake Larch (Super Microcomputer): If you had to choose one stock to be the mascot of the current bull market, it might be this one. super microcomputer. The company’s stock has generated an impressive total return of 774% over the past 12 months.
Putting this into context: microsoft (No slouch when it comes to stock performance) Last 8 years can generate similar total returns.
The rapid growth of supermicrocomputers caused the stock price to soar from around $86 per share to more than $880. That, folks, is the recipe for a stock split. The company has never conducted a stock split in its 17 years as a public company. But with the stock approaching $900 per share and investor interest increasing, it may be time.
SMCI data by YCharts
The company’s near-term outlook looks great as the AI revolution increases the demand for prefabricated server racks, one of the key components of AI data centers. The company reported exceptional financial results a few weeks ago, raised its full-year outlook, and offered some very upbeat commentary on its post-earnings conference call.
So, given the stock’s impressive performance, now may be the right time for the supermicrocomputer to conduct its first stock split, a development that many investors would welcome.
Due to the dominance of AI chips, the stock price of this stock has fallen into the clouds
Will Healy (NVIDIA): Amid the generative AI boom, Nvidia is in trouble. The stock has risen about 240% over the past year as demand for chips designed for AI workloads has soared. This brings the stock price to approximately $740 per share at the time of writing.
Coincidentally, that price is close to where Nvidia last went through a 4-for-1 stock split in July 2021, and the stock has increased nearly 300% since then.
In addition to the company’s current stock price, NVIDIA’s market position and growth seem to be the basis for a further split. According to analysts, it has an estimated 85% market share in the high-end AI chip market. raymond james. Additionally, Allied Market Research estimates the AI chip market to have a compound annual growth rate of 38% through 2032.
With numbers like these in mind, it’s no surprise that revenue increased 206% annually to more than $18 billion in the third quarter of fiscal 2024 (ending October 29). This increased gross profit margin to 74%, compared to 54% in the same period last year, when operating expenses increased by 16%.
As a result, Nvidia’s net income exceeded $9.2 billion, an increase of nearly 14 times. Even with this increase, investors aren’t shying away from bidding the stock even higher, despite the P/E ratio of 97.
Additionally, NVIDIA may have a less-discussed reason for wanting another split. With a market capitalization of $1.8 trillion, it is arguably the most important semiconductor stock on the market. If the nominal stock price falls, the company will dow jones industrials index. The Dow Jones Industrial Average is a price-weighted index, and the addition of Nvidia will further enhance the company’s prestige and investor interest, acting as an additional positive catalyst.
In fact, when it comes to semiconductor stocks, no company seems to be better positioned than Nvidia. And given its continued growth prospects and history, a stock split could make it attractive to prospective buyers and the index alike.
Meta’s strong momentum may continue due to stock split
Justin Pope (Metaplatform): In late 2022, when the stock price was just $89, most investors probably weren’t thinking about the possibility of a stock split. meta platform on their bingo cards. But Wall Street is nearing the end of the first quarter of 2024, and the stock is rapidly heading toward $500. This epic comeback is no coincidence. The stock has been on a roll since the company overcame adversity in its advertising business and cut expenses to get profits back on track.
Two consistent truths have been lost in the ups and downs of stock prices. First, Meta’s three-headed monster of social media apps — Facebook, Instagram, and WhatsApp — never stopped growing. The number of monthly active users has increased from 3.71 billion in the third quarter of 2022, when the stock price bottomed out, to 3.98 billion now. This doesn’t seem like a big deal, but half of the world’s population uses these apps, and Meta’s audience is still growing at a significant pace.
Second, Meta has continued to invest in building out computing systems for the company’s long-term AI ambitions. Meta is already leveraging AI to grow its advertising business, and the consumer-facing nature of Meta’s apps gives it tons of room to innovate over time.
Stock splits do not change a company’s basic valuation. Fortunately, if the business delivers the 20% annualized earnings growth that analysts expect, Meta’s forward P/E ratio of 23x is attractive. When Meta splits a stock, the numbers tell us it’s a stock split that you can buy and hold with confidence for the long term.
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