The stock market is experiencing a red-hot streak, with major indexes like the S&P 500 and Dow Jones Industrial Average reaching new all-time highs. However, it’s the Nasdaq Composite, with its heavy focus on technology stocks and artificial intelligence (AI), that is taking the lead. Over the past year, the Nasdaq Composite has seen a remarkable 33% increase.
With the market soaring and stock prices reaching towering heights, it’s time to talk about stock splits. Stock splits are a way for companies to divide their existing shares into multiple shares, effectively reducing the price of each share. This can make stocks more affordable for individual investors and potentially attract more interest in the company.
Three stocks that appear ready for a stock split are Super Micro Computer, Nvidia, and Meta Platforms. Super Micro Computer has seen incredible growth, with its shares generating an astonishing total return of 774% over the past year. Its stock price has risen from around $86 to over $880, making it a prime candidate for a stock split.
Nvidia, known for its dominance in the AI chip market, has also experienced significant growth in its stock price. With a rise of nearly 240% over the past year, Nvidia’s shares are currently priced at around $740. Considering its market positioning and projected growth in the AI chip market, a stock split could be a beneficial move for the company.
Meta Platforms, formerly known as Facebook, has undergone a remarkable comeback after overcoming challenges in its advertising business. Its shares, which were once priced at $89, are now approaching $500. With continued growth in its user base and investments in AI technology, a stock split could help maintain its momentum in the market.
It’s important to note that stock splits don’t change a company’s fundamental valuation. However, they can make stocks more accessible to individual investors and potentially attract more attention from major indexes like the Dow Jones Industrial Average. In the case of Nvidia, a lower nominal share price could increase its chances of being included in the index, which could further boost investor interest.
As the stock market continues to rise and the demand for AI-related companies grows, stock splits could be a strategic move for these three stocks. Investors should keep an eye on Super Micro Computer, Nvidia, and Meta Platforms as they navigate the market’s red-hot streak and consider potential stock splits.
DISCLOSURE: The Motley Fool has positions in and recommends Meta Platforms, Microsoft, and Nvidia.
