Potential Stock Splits to Watch: Microsoft and ASML Poised for Growth

When a company splits its stock, the fundamental value of the business remains unchanged. However, stock splits often follow a significant increase in share price and indicate management’s confidence in future gains. Many investors tend to gravitate toward companies when they announce stock splits, looking for potential profit opportunities.

Identifying companies that may soon consider stock splits could be beneficial. These stocks often still possess considerable growth potential, and a split might attract increased investor interest. For long-term investors, buying before a split could yield positive results, even if those stocks never split again, as professionals on Wall Street still foresee valuable upside.

Microsoft (NASDAQ: MSFT) and ASML Holdings (NASDAQ: ASML) have experienced share price increases of over 600% in the last eight years. Such remarkable appreciation often leads to stock splits, especially given their substantial initial share prices. Analysts on Wall Street predict significant future growth for both companies.

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1. Microsoft: Up 622% Since October 2016

Microsoft has made a significant investment in OpenAI, a leader in generative artificial intelligence, increasing its stake by $10 billion in early 2023. As a result, Microsoft’s Azure cloud platform has become the top choice for developers working on advanced language models like GPT-4o. Additionally, Microsoft has integrated AI features into its software products, including GitHub, Dynamics 365, Office 365, and Power Platform.

These strategic moves have led to impressive results, with Azure’s revenue climbing 30% in the last quarter. Management expects even stronger outcomes in the latter half of fiscal 2025 as investments in new data center capacity take effect.

Microsoft also reports strong interest in its Copilot software, which helps users complete tasks efficiently. Subscribers of Copilot for Microsoft 365 increased by over 60% in the last quarter alone. With more than 400 million Office 365 users, there is substantial potential for further growth in this area.

The average target share price among Wall Street analysts stands at $496, indicating a 19% upside for Microsoft’s stock. Currently, it trades about 32 times projected earnings. Given the growth factors driving Microsoft’s operations, this high price-to-earnings ratio appears justified for those pursuing growth investments. Despite backing away from its all-time high, shares are still valued above $400, making a split logical for this high-priced Dow component.

2. ASML Holdings: Up 694% Since October 2016

ASML is benefiting from the rising demand for artificial intelligence technology. The company’s extreme ultraviolet (EUV) lithography machines are critical for producing the most advanced semiconductors available. ASML holds a unique position as the only supplier of these essential machines.

As tech giants like Microsoft build extensive data centers filled with silicon, ASML is poised to gain substantially in the long term. However, it’s essential to remember that chip manufacturers cannot quickly expand capacity due to the long lead times for ASML’s large machines, which require installation space and infrastructure upgrades.

This context leads ASML’s management to declare 2024 a “transition year,” predicting flat revenue and margin contractions as they prepare for the upcoming increased machinery production scheduled for delivery in 2025. Nevertheless, they project revenue to reach between 30 billion and 40 billion euros ($33.2 billion to $44.2 billion), representing a 27% increase over 2023’s midpoint estimates.

Looking further ahead, ASML anticipates solid growth from new unit sales and ongoing service for its existing installations. Management previously forecasted revenue of 44 billion to 60 billion euros ($48.1 billion to $65.6 billion) by 2030, with rising gross margins expected to reach up to 60%, compared to 51.5% currently. Given the recent surge in demand for AI chips, higher revenues may be on the horizon.

Wall Street analysts have a target price average of $1,127, suggesting about 33% growth potential for ASML’s stock. At approximately 26 times projected earnings for 2025, the shares are comparatively low-cost for their anticipated growth in earnings over the next several years. This growth trajectory, combined with rising sales and expanding margins, makes the stock appealing at its current price point.

ASML shares are currently trading around $850, significantly high enough to warrant consideration for a stock split, especially if the share prices continue to rise above $1,000.

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Adam Levy has positions in Microsoft. The Motley Fool has positions in and recommends ASML and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.