Stock Split Watch: 3 Hot Tech Stocks with Potential Splits in 2024

One of the most interesting developments for investors over the past few years has been the return in popularity of stock splits. Generally speaking, these moves have come on the heels of strong business results, leading to strong stock price increases as well. Since stock splits do not affect the intrinsic value of a company, the main reason companies cite is the desire to keep their shares affordable to the average retail investor.

Looking back over the past few years, this trend is highlighted as many well-known companies have split their stock. These include:

• Amazon: June 3, 2022 1-20 split
• Dexcom: June 10, 2022 4-1 split
• Shopify: June 28, 2022 10-1 split
• alphabet: July 15, 2022 1-20 split
• Tesla: 3-1 split August 24, 2022
• Palo Alto Networks: 3-1 split September 13, 2022
• monster drink: March 27, 2023 1-2 split
• Celsius Holdings: 3-1 split November 15, 2023

A look at some of last year’s top performing stocks suggests there could be more stock splits in 2024.

Image source: Getty Images.

1. Nvidia

Nvidia (NVDA -0.20%) is best known for pioneering the graphics processing unit (GPU), which renders realistic images in video games. Over the years, the company has adapted its chips to provide the computational power needed for cloud computing, data centers and, more recently, generative artificial intelligence (AI) applications.

NVIDIA currently controls about 95% of the market for processors used in machine learning, the nascent field of AI, according to data compiled by New Market Research. This suggests that the company is positioned to lead the generative AI market.

Recent financial results seem to support that view. In the third quarter of fiscal 2024 (ending October 29), Nvidia record Revenues increased 206% year over year to $18.1 billion, and diluted earnings per share (EPS) increased 1,274% to $3.71. Last year’s weak results skewed the comparison, but this helps explain the long runway ahead.

Nvidia has a long history of impressive growth, but excitement about its AI-powered achievements has helped drive its stock price up 239% in 2023. Its performance is even more remarkable when considering the past 10 years. Revenue increased 1,480% and net income increased 6,190%. This growth has fueled a meteoric rise in Nvidia’s stock price, which has increased more than 13,650% to $531 at market close on Tuesday. Despite its performance, NVIDIA still trades at a reasonable price-to-earnings (PEG) ratio of less than 1, a benchmark for cheap stocks.

The company’s most recent stock split was announced in May 2021, when the stock was trading at around $600 per share, just 13% higher than its current price. If things continue on their current trajectory, and history is any indication, it won’t be long until Nvidia announces its next stock split.

2.Microsoft

microsoft (MSFT 1.00%) is best known for its Office suite of productivity tools and its ubiquitous Windows PC operating system. But last year, the company gained a lot of attention in the field of generative AI. After acquiring a significant stake in ChatGPT’s parent company, OpenAI, Microsoft released Copilot, a suite of AI-infused assistants designed to streamline time-consuming, everyday tasks. These moves marked the beginning of the current AI arms race.

Strong demand for Microsoft’s AI tools has accelerated the growth of Azure Cloud, the company’s “Big 3” cloud infrastructure offering. Not only did its calendar third-quarter growth outpace its competitors, Microsoft credits 3 percentage points of its growth directly to AI demand.

In the first quarter of fiscal 2024 (ending September 30), Microsoft’s revenue increased 13% year-over-year and EPS increased 27%. However, since Copilot was not released to the public until November, its impact has not yet affected financial statements.

Microsoft has a long and distinguished track record of enviable growth, but the company’s visionary AI moves helped propel its stock price up 57% in 2023. When you step back and think about it, the results are even more convincing. Over the past 10 years, revenue has increased by 177% and net income has increased by 294%. That boosted Microsoft’s stock price by nearly 817%, and the stock was valued at about $376 as of Tuesday’s market close. The stock is selling for 33 times forward P/E, which is worth a slight premium given its history.

The company conducted nine stock splits between 1987 and 2003, but the stock price rarely rose above $175. Microsoft hasn’t split its stock since 2003, but the stock is currently trading above its all-time high. Two degrees Its price. And the company has only scratched the surface of his AI opportunities, suggesting further stock price gains are ahead.

Microsoft hasn’t disclosed plans for a stock split, but given its strong growth, this could be the year the company splits its high-priced stock along with tech companies.

3. Metaplatform

In 2023, meta platform (meta 1.30%), features many catalysts to help lift the stock. The company’s cost-cutting campaign had dramatic results, digital advertising began to recover from a historic drought, and AI proliferated. Each of these factors helped Meta regain its footing, sending the stock up 194%.

Meta’s long history with AI helped the company pivot to leveraging its expertise. Meta quickly developed Llama AI and it was released for a fee on all major cloud services. Llama AI 2 was introduced late last year, and rumors suggest that Llama 3 is scheduled to debut in early 2024.

In the third quarter, Meta’s revenue was $34.1 billion, up 23% year-over-year, and EPS was $4.39, up 168%. This is despite his digital ad spending growing by only 7.8% last year. Meta growth will accelerate as ad spending increases again.

Then there’s Advantage+, an AI tool designed to empower advertisers on Meta’s social media platforms. This quickly became “one of his fastest growing advertising products” in Meta’s history. Recent trials have shown 35% and 58% increases in return on ad spend. decrease Each purchase increases the cost. By streamlining and automating advertising campaigns, Meta simplifies the process, increases profitability, and attracts more advertisers.

While the growth of the meta over the last year has been significant, the growth over the past decade has been even more impressive. Revenue he increased by 1,260% and net profit he surged 1,700%. That spurred a solid 493% jump in Meta’s stock price, and at market close on Tuesday the stock was valued at about $357, within 6% of its all-time high. Not bad, considering Meta’s stock is selling for a PEG ratio of less than 1.

Given its history of consistent growth and ties to AI, 2024 could be the year Meta joins a major tech company and splits its stock.