Nvidia (NASDAQ: NVDA) shares will soon trade around 10e from last week’s price – and for good reason. The company just completed a 10-to-1 stock split, which is why you can get in on Nvidia stock at just over $100 instead of over $1,000 as of the opening of today’s trading session.
Stock splits, by offering more shares to current holders, lower the price of each individual share, making it easier for a wider range of investors to purchase a particular stock. With the split, Nvidia joined the ranks of many tech companies that had seen their shares soar – thus taking the step to rein them in and potentially prepare for a whole new era of growth. Companies out Alphabet Unpleasant Amazon And Tesla all have done stock splits in recent years.
When Nvidia’s stock price rose above $900 earlier this year, investors speculated about a possible split, and when it was announced late last month — along with a stellar earnings report — the stock soared above $1,000. So now that Nvidia has completed this long-awaited operation, here’s what to look out for next.
Details about Nvidia’s stock split
First, some details about the stock split. Nvidia issued the new shares to current holders after the close of trading on June 7. So today they will start trading at the split-adjusted price. This doesn’t change Nvidia’s total market value, which rose to $3 trillion last week, surpassing Nvidia’s. Apple and becoming the second largest US company (temporarily – it has since fallen and is just behind the iPhone maker).
And the move won’t change the value of your investment if you bought Nvidia stock before the stock split. If you had one share then, you now have a total of ten, but the investment is still worth about $1,200.
If you decide to buy or sell Nvidia stock today or anytime later, you’ll notice one difference. If you are a buyer, you can easily make a small investment in Nvidia without having to buy fractional shares. And if you want to sell, the split has given you new flexibility: Shareholders who now own $1,200 worth of Nvidia can lower their bet without closing the position completely. That was not possible last week when one share was worth that amount.
Now let’s move on to what’s next for Nvidia. The stock split is positive for Nvidia and shareholders, but don’t expect it to push the stock higher or lower today or tomorrow. These operations are mechanical movements and therefore do not act as a catalyst for stock performance.
Here’s what could boost Nvidia’s stock
But here’s the good news. Other elements are poised to drive Nvidia stock higher in the long term, and these are tied to Nvidia’s biggest business: designing graphics processing units (GPUs) and other products and services for artificial intelligence (AI) customers. ).
Two catalysts to keep an eye on in particular are the upcoming releases of Nvidia’s H200, a GPU that Nvidia says nearly doubles the inference capabilities of the current H100. The company is preparing to ship the H200 in the second quarter and says demand is exceeding supply.
Here’s something AI customers and the investing community have been eagerly awaiting: Nvidia has developed an entirely new architecture called Blackwell, making it the best-performing chip ever. The Blackwell architecture could result in 25 times lower total cost of ownership for customers and better energy efficiency than the current Hopper architecture.
Blackwell question
Nvidia is preparing to launch Blackwell later this year, and the company says demand for the platform is also outpacing supply – and this situation is likely to continue next year.
News about the launch of these products and the development of sales are the catalysts that could determine whether Nvidia shares continue to rise in the coming months. The company’s work with governments pursuing sovereign AI projects could also provide direction for the stock.
All of this means that, yes, this recent stock split was a wise decision by Nvidia and could encourage more investors to get into this growth story. But Nvidia’s ability to maintain its top position in the market and grow revenue at a rapid pace is what should guide its stock in the near term and over time – and given its track record the company and its future prospects, these elements could keep Nvidia’s stock roaring. higher.
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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon and Tesla. The Motley Fool holds positions in and recommends Alphabet, Amazon, Apple, Nvidia and Tesla. The Motley Fool has a disclosure policy.
Nvidia just completed a 10-to-1 stock split. Here you can read what you should pay attention to next. was originally published by The Motley Fool
