One of the most anticipated events in the stock market has recently occurred: artificial intelligence (AI) chip giant. Nvidia (NASDAQ: NVDA) completed a stock split, dropping the price of its shares from over $1,200 to about $120. The 10-to-1 split occurred on June 7, and the stock began trading at the new price in early trading this week.
Nvidia has been in the spotlight in recent years thanks to rising profits and stock prices: the stock is up more than 500% in the past three years. And there’s a good reason for this kind of success: the company sells the world’s highest-performing graphics processing units (GPUs), chips that power critical AI tasks, as well as entire platforms for AI customers. In its most recent quarter, the second quarter of fiscal 2025, Nvidia reported a record $22.6 billion in data center revenue (including all AI-related activities), a triple-digit percentage gain from the year-earlier period.
With the stock trading at a tenth of its former price, you might be wondering whether you should get in on Nvidia. Before we decide, let’s consider three reasons to buy and one reason to sell.
Reason to buy: A lower share price gives you more flexibility
Nvidia’s recent stock split means you only need about $120 to buy a share – down from $1,200 before the split. Of course, in pre-split days you could have bought fractional shares to open a small position in Nvidia or add a little to your current position. But certain brokers don’t offer fractional shares, so it’s not as convenient as buying full shares.
All this means that Nvidia now offers you more flexibility at a lower price per share. You can more easily buy on a smaller budget or expand your position. And if you ultimately want to reduce your Nvidia position, you can do so in smaller increments.
The stock split yourself isn’t a reason to buy Nvidia: instead, you’ll want to invest in the company for fundamental reasons, such as its earnings track record or long-term prospects. But the new price per share makes it easier to get into Nvidia on a limited investment budget – making this a good time to get into the stock.
Reason to Buy: A new source of revenue growth is just around the corner
As mentioned, Nvidia’s revenues have already taken off, and this momentum is far from over. Nvidia actually has a new source of revenue growth on the horizon. The company is preparing to launch its Blackwell architecture, packed with six breakthrough technologies, including Nvidia’s most powerful chip ever.
This new GPU is packed with 208 billion transistors, compared to 80 billion in the current Nvidia H100 GPU – and this increase in transistors equates to more processing power. Other features include advanced data protection capabilities and an AI-based maintenance system to predict potential problems and prevent system outages.
Customers are already lining up to get their hands on Blackwell, and Nvidia recently said demand is outpacing supply. And Nvidia expects this trend to continue next year.
All this means that Nvidia’s recent trend of record quarterly data center revenue could continue, boosted by demand for Blackwell.
Reason to buy: the promise of annual innovation
Finally, another reason to love Nvidia has to do with its focus on innovation. Blackwell is just ahead of the curve, but the company won’t be relying on this groundbreaking new system for long.
Nvidia has promised a “one-year cadence” of innovation, meaning the company will release a better-performing GPU every year.
This is crucial because it is perhaps the only element that gives Nvidia an edge over its rivals. Players like it Intel And Advanced micro devices has recently released new chips, and in certain cases they may outperform Nvidia’s current H100.
But that’s not a problem for Nvidia, because just a few months later the company will launch an even more powerful GPU – and this should be the scenario year after year.
Reason to sell: mediocre performance after previous stock splits
Nvidia’s recent stock split wasn’t the company’s first. The tech giant completed five before this one, and after the past three the stock was in the doldrums for some time. So history tells us that Nvidia stock has traditionally not performed well after stock splits.
If Nvidia stock follows the same path this time around, Nvidia shareholders could be looking at a few months of disappointing returns. That means some, especially those who have owned Nvidia for years and made big gains, may consider selling and locking in the gains.
Should you buy or sell Nvidia?
In my opinion, the case for buying Nvidia stock outweighs the case for selling at this point. Yes, Nvidia stock – if it follows the historical trend – may not take off right away. But this is a short-term issue. Over time, Nvidia has everything it needs to keep rising: leadership in a growth market, commitment to innovation that should ensure its leadership, a great earnings track record, and encouraging long-term prospects.
All this means that even if Nvidia slips or stagnates in the coming months, it’s no reason to worry. The future looks bright for this AI champion, which is why the stock is a great buy right now.
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Adria Cimino has no positions in the stocks mentioned. The Motley Fool holds positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.
3 Reasons to Buy Nvidia After the Stock Split and 1 Reason to Sell was originally published by The Motley Fool
