One of the most anticipated events in the stock market unfolded recently as the artificial intelligence (AI) chip behemoth Nvidia (NASDAQ: NVDA) completed a stock split. This maneuver triggered a dramatic drop in Nvidia’s stock price from over $1,200 to approximately $120. The 10-for-1 stock split unfolded on June 7, catapulting the stock into trading at its revised rate at the dawn of the trading week.
Nvidia has basked in the limelight for the past few years courtesy of its skyrocketing earnings and soaring share prices. Over the last three years, the stock has surged by over 500%. This astronomical success is underpinned by Nvidia’s stature as the premier purveyor of graphics processing units (GPUs) globally. These chips are pivotal in fueling essential AI operations, alongside entire platforms that cater to AI clientele. In its most recent quarter, in its fiscal 2025 second quarter, Nvidia notched a historic $22.6 billion in data center revenue (encompassing all AI-related operations), marking a triple-digit upsurge from the corresponding period the previous year.
Unlocking Investment Opportunities
Fortified by a more accessible stock price post-split, potential investors are pondering whether to dive into Nvidia. Prior to reaching a verdict, let’s delve into three compelling reasons supporting a buy strategy and one rationale advocating a sell maneuver.
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Amplifying Acquisition Latitudes
The recent stock split translates into a diminished monetary layout of about $120 to procure a Nvidia share, against the $1,200 pre-split prerequisite. While fractional shares could have been procured in the pre-split epoch to initiate a modest Nvidia position or augment an existing one, some brokerages preclude fractional share offerings, rendering full shares acquisition more convenient.
These dynamics imply that Nvidia presently provides enhanced flexibility in light of its diminished per-share value. This decreased entry barrier facilitates a more seamless expansion or initiation of a position with a constrained budget. Moreover, reducing a Nvidia stake, when the occasion arises, can transpire in lesser increments, fortifying your investment maneuverability. While the stock split per se is not a justification for investing in Nvidia, fundamental aspects like the track record of earnings or long-term outlook should steer your investment decisions. Nonetheless, the reduced per-share price renders Nvidia more accessible for investors operating on a constrained financial outlay, rendering it an opportune moment to engage with the stock.
Forthcoming Revenue Growth Surge
As previously highlighted, Nvidia’s earnings trajectory has experienced an unprecedented surge, with this momentum displaying no signs of abating. Notably, Nvidia is bracing for a forthcoming surge in revenue growth. The company is poised to unveil its Blackwell architecture, replete with six transformative technologies, inclusive of its most potent chip to date.
This new GPU packs a punch with 208 billion transistors, dwarfing the 80 billion housed in Nvidia’s present H100 GPU. This transistor increment translates to augmented processing capability. Other features encompass advanced data security functionalities and an AI-centric maintenance system designed to anticipate potential glitches and avert system downtimes.
The remarkable demand for Blackwell among customers underscores the insufficiency of supply, a trend Nvidia envisions persisting well into the subsequent year. Evidently, this trajectory implies that Nvidia’s trend of announcing record-breaking quarterly data center revenue could continue to soar, propelled by Blackwell’s demand surge.
Promised Annual Innovation
Lastly, Nvidia’s allure is bolstered by its steadfast commitment to innovation. While Blackwell looms large on the horizon, the company isn’t resting on its laurels, waiting for this revolutionary system to spearhead its operations.
Nvidia has pledged an “annual rhythm” of innovation, promising the launch of a higher-performing GPU annually. This strategic move essentially ensures Nvidia’s pole position vis-a-vis its rivals. Although players like Intel and Advanced Micro Devices have recently debuted new chips that, in certain instances, may outshine Nvidia’s current H100, Nvidia remains unfazed. A few months down the line, the company will introduce an even more potent GPU, a cycle set to repeat annually.
Caution: Historical Precedents
The recent stock split isn’t Nvidia’s inaugural foray into such undertakings. The tech juggernaut has completed five prior splits preceding the latest one, and following the last three splits, the stock encountered a phase of stagnation. As historical data would dictate, Nvidia’s stock traditionally does not perform auspiciously in the aftermath of stock splits.
If Nvidia’s stock charts a similar course this time around, shareholders might contend with a spell of subpar returns. Consequently, individuals who have held onto Nvidia for an extended period, accruing substantial gains, might contemplate divesting their holdings to lock in profits.
Investment Outlook: Buy or Sell?
In light of the dynamics at play, the scales appear tipped in favor of acquiring Nvidia stock at this juncture, relegating the argument for selling to the shadows. Admittedly, Nvidia’s shares, should they adhere to historical patterns, might not chart an immediate ascent. However, this transitory turbulence should not set off alarm bells. Over time, Nvidia harbors the potential to continue its upward trajectory, underpinned by its dominant stance in a burgeoning market, a relentless commitment to innovation ensuring its market supremacy, a stellar track record of earnings, and encouraging long-term prospects.
All things considered, even in the face of transient setbacks or a period of stagnation in the imminent months, there’s no cause for alarm. The horizon appears radiant for this paragon of AI, underscoring why Nvidia’s stock embodies a compelling buy proposition at present.
