2 Potential AI Stock-Split Stocks to Watch in the New Year

By | December 19, 2023

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2023 was the year of artificial intelligence (AI) stocks. The launch of OpenAI’s ChatGPT in late 2022 set off a new race to leverage generative AI technologies, which some tech CEOs believe could be as transformative as the internet has been over the past three decades.

Stock splits, meanwhile, continue to capture investor attention after nearly all major tech stocks split their shares in 2021 and 2022, including Tesla, Apple, Alphabet, Amazon, Nvidia (NASDAQ: NVDA)And Shopify. Stock splits do not change the fundamentals of a stock. They just divide the metaphorical pie into more pieces. Investors still own the same percentage of the company as before. However, stock splits tend to excite investors because they act as a kind of milestone for a stock, indicating that the price has reached a certain level and can now be reset.

There is also evidence that stocks that have split their shares are outperforming the rest of the market. That could be a result of the momentum in the company that led to the stock split in the first place, or the reaction of investors to the split.

Looking ahead to 2024, we could see another wave of stock splits from major tech stocks Nasdaq Composite is up more than 41% this year. Let’s take a look at two AI stocks that could see a stock split next year.

A robot holding a computer with a virtual stock chart superimposed on it.A robot holding a computer with a virtual stock chart superimposed on it.

Image source: Getty Images.

1. Broadcom: a leader in networking technology

Broadcom (NASDAQ:AVGO) has quietly become one of the biggest stocks on the market, thanks in part to a series of acquisitions, including VMware earlier this month, and strong organic growth. Broadcom’s market cap is over $500 billion, and its stock has doubled this year as investors see the company as one of the winners of the AI ​​boom.

Overall growth is still slow due to the downturn in the semiconductor sector. However, the company sees demand for AI emerging as a key growth driver.

On the earnings call, CEO Hock Tan said generative AI revenue, powered by Ethernet solutions and custom AI accelerators, represented nearly $1.5 billion in revenue in the quarter, or about 20% of semiconductor sales. In fiscal 2024, the company expects generative AI revenues to account for 25% of semiconductor revenues, up from 15% in 2023. Combined with modest semiconductor revenue growth, this implies that generative AI revenues in the current financial year will almost double.

Broadcom stock is now trading at more than $1,100 per share. The stock has never had a split before, but now has one of the highest share prices in the world S&P500. While the company has not given any indication that it would split its shares, it meets the criteria of a company that would do so, although there is no rule mandating stock splits.

2. Nvidia: the hub of the AI ​​chip

No other stock is a bigger winner of the AI ​​boom than Nvidia. The graphics processing units (GPUs) and accelerators are in high demand from cloud infrastructure companies and others looking to scale and build capacity for AI applications.

Nvidia’s shares have more than tripled this year, and the company’s recent results indicate there are no signs of slowing down for the company as its AI capabilities are second to none. Revenue rose 206% to $18.12 billion in the third quarter, and adjusted earnings per share were up nearly 500% from a year ago. The company expects fourth-quarter revenue to improve to about $20 billion, up from $18.1 billion in the third quarter.

Nvidia stock is now hovering around $500/share, close to the $560/share it was trading at when it announced a stock split in 2021. A stock split would make sense for Nvidia, especially as the stock appears poised to continue delivering massive growth and expanding its margins. While there is no indication that Nvidia will split its stock next year, there is a good chance that another stock split will occur if Nvidia stock continues to rise.

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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. Jeremy Bowman has positions at Amazon, Broadcom and Shopify. The Motley Fool holds positions in and recommends Alphabet, Amazon, Apple, Nvidia, Shopify and Tesla. The Motley Fool recommends Broadcom and Nasdaq. The Motley Fool has a disclosure policy.

2 Potential AI Stock Splits to Watch in the New Year Originally published by The Motley Fool

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