Nvidia’s Stock Split: What Investors Should Know
Investors have reasons to be excited about stock splits.
Firstly, splits make expensive stocks more affordable, allowing more investors to participate. Secondly, a split can signal that a company is confident about its future growth, suggesting that the shares might rise again from the new, lower price. This anticipation drives investors to keep a lookout for upcoming stock splits, especially from prominent companies.
One high-profile company making waves is Nvidia (NASDAQ: NVDA). Known for its dominance in the AI chip sector, Nvidia has recently completed a stock split in June after its share price had soared past $900 earlier in the year, even crossing $1,000 following the split announcement.
Could Nvidia consider another stock split so soon after the last one? Let’s explore this idea.
Image source: Getty Images.
Nvidia’s Surge Fueled by AI Demand
Nvidia has become the leading player in the AI chip market, significantly benefiting its earnings and stock performance. In recent quarters, the company’s earnings have shown impressive triple-digit year-over-year growth, with revenues surpassing $35 billion, primarily driven by demand from AI clientele.
The company provides graphics processing units (GPUs) and related services to major tech players, including Microsoft and Alphabet. Nvidia has outpaced competitors through its commitment to innovation, pledging annual updates to its GPUs. Currently, it is boosting production on the highly anticipated Blackwell architecture, which is already facing supply constraints due to high demand.
Since the June stock split, Nvidia’s share price has risen approximately 14%. However, it’s crucial to note that the split alone is not the driving force behind this increase. Investors are likely optimistic about Nvidia’s future potential, particularly with the upcoming Blackwell launch.
Understanding Nvidia’s Stock Split Strategy
Let’s delve into stock splits and the likelihood of Nvidia pursuing another. A stock split decreases the price per share by issuing more shares to existing shareholders. For instance, Nvidia’s recent 10-for-1 stock split reduced its stock price from around $1,200 to about $120.
Nvidia has a history of executing back-to-back stock splits, having done so in June 2000 and September 2001, as well as April and September of 2006 and 2007. This indicates a willingness to split stocks more than once in a brief time frame.
Looking towards the next year, predicting another stock split for Nvidia seems unlikely. Currently, with shares priced around $138, the stock is accessible for most investors. Historically, $1,000 per share is viewed as a psychological barrier, prompting some investors to see stocks as overpriced, even if they aren’t fundamentally so.
Nvidia’s Stock Splits: A Historical Perspective
Nvidia has split its stock at lower price points compared to today, reflecting different company circumstances and revenue levels. In earlier years, its revenue was around $800 million annually, largely coming from video game customers, making stock splits a practical choice to reduce share prices. Fast forward to last year, AI customers have fueled Nvidia’s sales, leading to revenues exceeding $60 billion.
Clearly, Nvidia is not opposed to stock splits when beneficial. The company’s motivation for its recent split was to make shares more accessible to both investors and employees. However, given the current trading levels, Nvidia may not find it necessary to pursue another split soon, despite its impressive performance in the market.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Microsoft, and Nvidia. 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 those of the author and do not necessarily reflect those of Nasdaq, Inc.
