The graphics chip manufacturer NVIDIA, which has greatly benefited from the AI hype since the end of 2022, has completed its announced stock split.
Since the widespread availability of AI applications such as the chatbot ChatGPT, developed by Microsoft's associate company OpenAI, NVIDIA's stock has been unstoppable. The US corporation's graphic chips are particularly well-suited for AI applications, and are therefore in high demand by companies wanting to integrate artificial intelligence into their business models. This has led to impressive business figures for NVIDIA in recent quarters. In the last quarter, the company was able to increase its revenue by 262 percent to $26 billion, while profits rose from just over $2 billion to nearly $14.9 billion.
The strong business performance also drove NVIDIA's stock price upward. At the end of 2022, the stock was around 146 US dollars on NASDAQ, but it increased significantly in the following months. In May 2024, it surpassed the 1,000-dollar mark for the first time after presenting quarterly figures. Due to strong stock performance, NVIDIA's market capitalization temporarily exceeded three trillion US dollars, overtaking Apple and briefly becoming the second most valuable company in the world. Last Friday, June 7, the NVIDIA stock closed at 1,208.88 US dollars on NASDAQ, with a market capitalization of 2.97 trillion US dollars.
To make the stock appear more affordable and thus more attractive to small investors, the chip manufacturer announced a 1:10 stock split during the last financial report. This has now been executed. Investors received nine additional NVIDIA shares for each share they held. Today, Monday, the stock will be traded for the first time on a split-adjusted basis.
The stock split means a significant apparent reduction in the price of NVIDIA shares. In NASDAQ trading, an NVIDIA share temporarily cost 121.42 US dollars (up 0.49 percent) on Monday.
The company's market capitalization is not affected by the measure. The total value of NVIDIA shares in investors' portfolios also remains unchanged, as the lower price is offset by the higher number of shares. For long-term investors, this is not the first stock split at NVIDIA: The company last performed a stock split in a 1:4 ratio in July 2021.
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Throughout the current year, NVIDIA's stock has demonstrated significant strength and has gained 144.11 percent since the beginning of the year. The question now is whether this trend will continue after the stock split. Sam Stovall, Chief Investment Strategist at CFRA, expressed optimism to CNBC. "People would rather buy 16 shares at $20 each than four shares at $80 each, even though it's the same - it's simply human nature," said the expert. Therefore, the chances of further price gains for NVIDIA appear favorable even after the executed stock split.
