Attention Extreme Investors! Get ready to uncover the next potential stock split candidate after Chipotle Mexican Grill. Nvidia (NASDAQ: NVDA) is making waves with its soaring stock price, hovering around $950 per share, prompting speculation about a possible split. But what does this mean for investors, and should you consider buying into this chipmaker phenomenon?
What’s a stock split, and why does it matter?
A stock split is a strategic move by a company to divide its existing shares into multiple shares, increasing the number of outstanding shares without changing the market capitalization. This action can make the stock more affordable for retail investors who might otherwise find it too expensive to purchase full shares. By lowering the share price, companies like Nvidia can attract a wider investor base and potentially boost overall market capitalization.
Nvidia’s history with stock splits
Nvidia, under the leadership of co-founder and CEO Jensen Huang, has a track record of stock splits. Since going public in 1999, the company has executed five splits, including a 4-for-1 split in July 2021. With the stock trading around $950 per share, speculation is brewing about another upcoming split.
Is Nvidia a buy ahead of a potential stock split?
While stock splits can generate interest, investors should base their decisions on more than just this factor. Nvidia’s financial performance and management’s guidance are key indicators of its long-term stock potential. In fiscal 2024, Nvidia saw remarkable revenue growth of $60.9 billion and net income of $29.8 billion, primarily driven by demand for its H100 chip powering generative artificial intelligence.
Looking ahead to fiscal Q1 2025, Nvidia’s management projects significant revenue growth and improved gross margins, showcasing the company’s pricing power in the industry. Despite its current P/E ratio trading above its five-year median, the forward P/E ratio offers a more reasonable valuation for potential investors.
The Motley Fool Stock Advisor team has a track record of identifying high-potential stocks, and while Nvidia may not be their top pick, the company’s growth trajectory and industry leadership make it a compelling choice for long-term growth investors.
Don’t miss the opportunity to explore investment options beyond stock splits and harness the growth potential of companies like Nvidia. Stay tuned to Extreme Investor Network for expert insights and strategic investment advice to maximize your portfolio gains.
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