Nvidia‘s (NASDAQ: NVDA) groundbreaking 10-for-1 stock split marks a significant achievement for the AI chip giant.
This move represents Nvidia’s first stock split in close to three years, a period that saw the company splitting its shares amid the tech frenzy brought on by the pandemic. Moreover, it adds to the string of stock splits orchestrated by the “Magnificent Seven” since these tech powerhouses began their ascent during the pandemic’s onset.
Among these industry titans, five out of the seven have divided their shares in the last four years, with two – including Nvidia’s upcoming split set for June 7 – undergoing this process twice.
The table below displays recent stock split activities within the Magnificent Seven and their respective timelines.
| Company | Date | Size of Split |
|---|---|---|
| Apple | Aug. 28, 2020 | 4-for-1 |
| Tesla | Aug. 31, 2020 | 5-for-1 |
| Nvidia | July 20, 2021 | 4-for-1 |
| Amazon | June 6, 2022 | 20-for-1 |
| Alphabet | July 15, 2022 | 20-for-1 |
| Tesla | Aug. 24, 2022 | 3-for-1 |
| Nvidia | June 7, 2024 | 10-for-1 |
Data source: Company reports.
Interestingly, both Microsoft (NASDAQ: MSFT) and Meta Platforms (NASDAQ: META) are conspicuously absent from this list.
Given their anticipated meteoric individual share prices within the Magnificent Seven post-Nvidia’s stock split, they emerge as prime candidates for the next stock split.
Let’s delve into the potential scenarios for each.
Image source: Getty Images.
Is a Stock Split on the Horizon for Microsoft?
Microsoft, the reigning champion with a market cap surpassing $3 trillion, boasts a storied history of stock splits dating back to its inception in the 1980s. Despite this legacy, the company has remained relatively split-free in recent years, with its last division occurring during the early 2000s.
The resurgence of Microsoft under the stewardship of CEO Satya Nadella, coupled with its strategic moves in cloud computing and AI innovation, propels the company into uncharted territory. The stock’s soaring trajectory, now exceeding $400 per share, positions it as the third highest-priced stock on the Dow Jones Industrial Average.
Although Microsoft’s stance on a potential stock split remains undisclosed, the prospect seems probable if its shares sustain an upward trajectory. A division would aid in aligning the company with the price-weighted Dow’s preferences, steering clear of excessively high share prices.
Will Meta Platforms Follow Suit with a Stock Split?
Unlike its Magnificent Seven counterparts, Meta Platforms has steered clear of stock splits to date. Emerging as one of the youngest entrants within this elite group post-IPO in 2012, Meta Platforms initially traded at $38 per share. Fast forward to today, its shares command a robust $477 apiece, marking a remarkable 13-fold appreciation since going public.
Despite this remarkable growth trajectory, Meta Platforms has yet to embrace the stock split methodology, leaving investors curious about its next move.
While the correlation between stock splits and dividends remains indirect, Meta Platforms’ recent dividend commencement hints at potential strategic shifts in capital management. Although the share price falls slightly below the typical threshold for a split, it remains higher than its industry peers. Much like other companies in similar positions, a split could enhance retail investor appeal and potentially facilitate Meta’s inclusion in the Dow.
Forecasting the Next Stock Split within the Magnificent Seven
Within this dichotomy, Meta Platforms emerges as the likely frontrunner for an imminent stock split. With a higher share price and a relatively modest valuation in comparison to Microsoft, Meta Platforms exhibits favorable conditions for a surge from its current levels.
While Meta Platforms’ stock split remains speculative, the rationale behind such a move becomes increasingly plausible as the share price continues its upward journey.
Exploring Investment Opportunities with Meta Platforms
Prior to making investment decisions concerning Meta Platforms, it’s essential to consider the following:
The Motley Fool Stock Advisor analyst team recently unveiled their top 10 stock picks for investors seeking growth opportunities, with Meta Platforms notably absent from this list. These curated stocks hold the potential for exponential returns in the foreseeable future.
Consider the example of Nvidia from April 15, 2005 – an initial investment of $1,000 would have ballooned to $741,362*!
The Stock Advisor service furnishes investors with a robust investment blueprint, complete with portfolio construction tips, analyst insights, and bi-monthly stock suggestions, significantly outperforming the S&P 500 since its inception in 2002*.
*Stock Advisor returns as of June 3, 2024
