Nvidia stock (NVDA) began trading on a new 10-for-1 split basis on Monday, revising Friday’s closing price to $120.88 from $1,208.88. The stock closed almost 1% higher on the first day after the split.
The split means that owners of Nvidia common stock they owned at market close on Thursday would receive 10 shares for every share they owned. For example, if a shareholder owned four shares of Nvidia as of Thursday, they now own 40 shares after the split.
Stock splits make owning shares of a stock more affordable by lowering the price of individual shares without diluting the value of existing shareholders’ total holdings.
“The stock split will make Nvidia a lot more accessible to a lot of these retailers,” Matt Amberson of Option Research & Technology Services told Yahoo Finance last Thursday. “Now you rarely see a stock over $1,000 with 50% implied volatility, so option prices are extremely high, so options traders are really looking forward to the split.”
Nvidia’s split comes after the company’s total market valuation briefly surpassed $3 trillion on Wednesday, pushing the chip company past Apple to become the second most valuable publicly traded U.S. company.
Nvidia shares have skyrocketed thanks to the explosion of interest in generative AI that started when OpenAI debuted its ChatGPT software in late 2022. Since then, hyperscalers like Amazon (AMZN), Google (GOOG, GOOGL), and Microsoft (MSFT) have been fighting to get their hands on Nvidia’s hardware to power their own generative AI platforms.
That caused Nvidia’s revenues to skyrocket. In the first quarter, Nvidia reported adjusted earnings per share of $6.12 on revenue of $26 billion, up 461% and 262%, respectively, from the same period a year ago.
Nvidia’s data center revenue rose 427% year-over-year to $22.6 billion in the most recent quarter, accounting for 86% of the company’s total revenue for the quarter. Nvidia’s gaming segment, which was previously its main business, generated revenue of $2.6 billion.
And Nvidia continues to develop new hardware to keep customers coming back for more. On June 3, CEO Jensen Huang announced that an upgraded version of its Blackwell AI platform, called Blackwell Ultra, is coming in 2025, as well as an entirely new platform called Rubin, which will be released in 2026. And in 2027, the company will release an Ultra version of the Rubin hardware.
Stock splits are seen by investors as a sign of strength, and as a result, companies that split their stock typically outperform the S&P 500 in the year following their announcement.
On average, stocks rise 25% in the 12 months following their split announcement, compared to the S&P 500’s average return of 12% in the same time frame, according to Bank of America analysis. This applies “across all market regimes,” BofA investment and ETF strategist Jared Woodard wrote in a note to clients.
The trend mainly covers the period from 2000 to 2009, amid the collapse of the technology bubble. Nvidia shares have risen about 27% since the company announced its split on May 22.
Nvidia’s stock split comes as AMD (AMD) and Intel (INTC) are giving chase, announcing their own AI hardware and laying out their future product roadmaps as alternatives to Nvidia’s. Nvidia’s customers are also developing their own AI chips to train and run AI models to help reduce the cost of purchasing new Nvidia products.
It’s not just hyperscalers, though. Meta (META), Tesla (TSLA) and a slew of other major tech and automotive companies are trying to get their hands on Nvidia’s chips to train and deploy AI models for everything from recommendation engines to autonomous driving software.
Additionally, Nvidia says it has a growing total addressable market beyond technology companies, including government organizations, research institutions and more, meaning there are many more opportunities.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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