HomeMarket News Exploring the Potential of Two "Magnificent Seven" Companies for Stock Splits Exploring the...

Exploring the Potential of Two “Magnificent Seven” Companies for Stock Splits Exploring the Potential of Two “Magnificent Seven” Companies for Stock Splits

Actionable Trade Ideas

always free

As 2024 unfolds, the market sees the Dow Jones Industrial Average, as well as the S&P 500 and Nasdaq Composite, achieving record highs. However, itโ€™s the โ€œMagnificent Sevenโ€ that are truly driving the marketโ€™s meteoric rise.

The Magnificent Seven, a group of heavyweight corporations, have been pivotal in propelling the market forward. Leading the pack are companies such as:

A blank paper stock certificate for shares of a publicly traded company.

Image source: Getty Images.

Industry Titans with Strong Competitive Advantages

The Magnificent Seven derive their strength from long-standing competitive edges.

  • Microsoftโ€™s Azure and Windows maintain global dominance in cloud services and desktop operating systems.
  • Apple leads in smartphone innovation and boasts a unique share repurchase program.
  • Amazon dominates U.S. e-commerce and operates a leading cloud platform.
  • Alphabetโ€™s Google and YouTube command significant market shares in search and social media.
  • Meta Platforms, through Facebook and its subsidiaries, amasses billions of active users monthly.
  • Tesla reigns as North Americaโ€™s foremost EV producer with consistent profitability.

Many of these companies are also known for executing stock splits, enhancing accessibility to retail investors.

Potential Stock-Split Pioneers among the โ€œMagnificent Sevenโ€

A stock split is a non-substantive event that modifies share price and count without impacting market capitalization or performance. Several Magnificent Seven members have recently undertaken forward-stock splits, with companies such as:

  • Nvidia: 4-for-1 stock split.
  • Amazon: 20-for-1 stock split.
  • Alphabet: 20-for-1 stock split.
  • Tesla: 3-for-1 stock split.

While Nvidia appears an obvious candidate for further stock splits, operational challenges may impede this decision. Emerging competitors and customer shifts could hinder Nvidiaโ€™s growth trajectory, potentially deflating its stock price.

As alternative frontrunners for stock splits, two other Magnificent Seven components stand out.

A person seated on a couch in their home typing on a laptop.

Image source: Getty Images.

Meta Platforms: A Likely Candidate

Meta Platforms, the social media behemoth, seems primed for a stock split ahead of Nvidia. Recently surpassing $500 per share, Meta could sustain or even expand its high valuation due to its robust social media ecosystem.

With a diverse platform including Facebook, WhatsApp, and Instagram, Meta holds considerable sway over businesses seeking broad advertising reach. The companyโ€™s liquidity surplus, exceeding $65 billion, affords CEO Mark Zuckerberg room for experimental ventures like exploring the metaverse.

Unlike Nvidia, Meta remains attractively priced even after steady gains. At 13 times 2025โ€™s estimated cash flow, Meta offers a significant discount compared to its decade-long cash flow multiple.

Microsoft: A Strong Contender

Another potential stock-split pioneer among the Magnificent Seven is Microsoft. The technology giant exhibits a resilient business model and innovative solutions, making it a favorable choice for a stock split ahead of Nvidia.

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.