Successful Stock Splits: Nvidia and Broadcom in Focus

When companies split their stocks, it is often a sign of impressive growth that propels their stock prices upwards. A notable example of this is Nvidia, a leading chip supplier, which has split its stock six times in the past 25 years, including twice since 2021. The most common type of split is the forward stock split, where the company's goal is to make the stock price more affordable for investors. Although shareholders receive more shares, the value of their investment remains unchanged due to the lowered individual share price. Stock splits alone are not sufficient reasons for an investment; growth prospects and current company figures remain crucial. If the stock is traded at a reasonable price relative to its growth, it undoubtedly presents a worthwhile investment. Two growth stocks that recently executed a 10-for-1 split and can now be purchased for less than $200 are particularly interesting. Nvidia is one of the most successful stocks over the past decade, having gained an impressive 24,000% since 2014. In the past five years, the company has conducted two stock splits, including a 4-for-1 split in 2021 and a 10-for-1 split in June of this year, which brought the stock price down to an affordable $118. Despite short-term hurdles, investors remain heavily focused on Nvidia's growth. The company plans to introduce its Blackwell GPU architecture, and despite competition and export restrictions in China, the business in China continues to grow. Key U.S. customers like Amazon Web Services (AWS) are developing their chips for artificial intelligence (AI) applications, increasing the demand for alternatives. Nevertheless, Nvidia remains the leader in GPUs, with revenues growing 122% year-over-year in the second fiscal quarter. Analysts expect a strong revenue growth of about 79% for Nvidia in the third quarter and a profit increase of 40% next year. These impressive figures could elevate the stock price to $200 by the end of 2025, a potential increase of 69%. Another frontrunner is Broadcom, a leading provider of networking solutions and data center software. After a 10-for-1 split in July, the stock price fell to $167. Broadcom is excellently positioned for long-term growth in the AI market, supported by a ten-year investment strategy that is now bearing fruit. The company also sees growth potential in the smartphone business, particularly with Apple as a key customer. Through a long-term contract to supply radio components to Apple, Broadcom expects a sequential revenue increase of 20% in the fourth quarter. Analysts are currently optimistic about Broadcom, despite some already realized risks such as weakening smartphone sales. Thanks to its strong presence in the AI infrastructure sector, the company is forecasted to have a bright future. Long-term, annual profit growth of 19% is expected, making the stock a promising investment. Interested parties should consider whether shares of Nvidia should become a part of their portfolio.