The Future of NVIDIA: Post-Split Valuation and Growth Forecast

NVIDIA Corporation (NVDA)a leader in the AI ​​and semiconductor technology industry, announced a 10:1 split of the company’s issued common stock. Last earnings announcement In May. Shareholders of record as of June 6th received an additional nine shares for each share held since the close on Friday, June 7th. Trading will begin on a split-adjusted basis when the market opens on June 10.

This strategic move is poised to reshape the landscape for Nvidia investors and the broader technology market.

Post-split valuation

NVDA was already a leading AI stock in the market, but investor interest in the chipmaker surged when the 10:1 stock split took effect after the market closed on June 7. Shares of the most popular stocks in the S&P 500 soared tenfold on Friday. Following the much-anticipated stock split.

Moreover, Nvidia’s stock price is up more than 158% in the last six months and almost 222% over the past year. In particular, the stock price has risen more than 3,222% over the past five years. During this remarkable performance, Nvidia’s market capitalization increased to approximately $3 trillion. Amazon (AMZN) and Alphabet Inc. (GOOGL). Before the 1:10 split, the stock was trading at a high price of $1,209.

The chip giant’s strategic decision to split its stock follows a broader trend among tech giants to make stock ownership more affordable and attractive to retail investors. As more individual investors gain access to Nvidia’s stock following the split, trading activity and demand will likely increase, potentially pushing the stock price higher.

According to BofA survey data: The percentage of companies announcing stock splits is approximately 25%. Historically, the S&P 500 gain in the 12 months following a stock split is 12%. Therefore, stock splits are often viewed as bullish signals that are accompanied by positive investor sentiment and increased buying activity.

Solid profits and healthy outlook

The stock split isn’t the only reason for NVDA’s recent rally. The company also reported better-than-expected sales and earnings in the first quarter of fiscal 2025, driven by strong demand for its AI chips. For the quarter ended April 28, 2024, Nvidia’s revenue increased 262% year-over-year to $26.04 billion. This exceeded the consensus sales estimate of $24.59 billion.

Data centers, the company’s largest business segment that includes AI chips and many of the additional components needed to run large AI servers, posted record revenue of $22.6 billion, up 427% from the previous year.

“Our data center growth is driven by strong and accelerating demand for generative AI training and inference on the Hopper platform. Beyond cloud service providers, generative AI has expanded to consumer Internet companies, enterprises, sovereign AI, automotive and healthcare customers, creating multibillion-dollar vertical markets,” said Jensen Huang, founder and CEO of NVDA.

“We are ready for the next wave of growth. The Blackwell platform is in full production and forms the foundation for generative AI at trillion-parameter scale,” Huang added. On a call with analysts, the CEO noted that Blackwell will see significant revenue this year and that new chips will be deployed in data centers by the fourth quarter.

The chipmaker’s non-GAAP gross profit rose 328.2% year over year to $20.56 billion. NVDA’s non-GAAP operating income was $18.06 billion, an increase of 491.7% year-over-year. Non-GAAP net income increased 461.7% year over year to $15.24 billion. Additionally, non-GAAP EPS was $6.12 compared to analyst estimates of $5.58, a 461.5% year-over-year increase.

Additionally, NVIDIA’s cash, cash equivalents and marketable securities were $31.44 billion as of April 28, 2024, compared to $25.98 billion as of January 28, 2024.

According to its outlook for the second quarter of 2025, the company expects revenue to be $28 billion (+-2%). Non-GAAP gross margin is expected to be 75.5% ± 50 basis points. NVDA’s non-GAAP operating expenses are expected to be approximately $2.8 billion.

dividend increase

NVDA increased its dividend payments to reward shareholders and demonstrate confidence in its financial strength and growth prospects. The company increased its quarterly cash dividend by 150%, from $0.04 per share to $0.10 per common share. The dividend is equivalent to $0.01 per share on a post-split basis and is scheduled to be paid on June 28 to all shareholders of record on June 11.

Nvidia’s dividend yield is modest compared to its technology peers, but its significant cash flow and strong balance sheet provide ample room for growth.

Dominance of AI and Data Center Markets Creates Unprecedented Growth Opportunities

NVDA is strategically positioned at the forefront of the AI ​​and data center market due to high demand for AI chips for data processing, training and inference from large-scale cloud service providers, GPU specialty service providers, enterprise software and consumer Internet companies. Additionally, vertical industries such as automotive, financial services, and healthcare drive demand.

Statista predicts that the Generative AI (GenAI) market will reach $36.06 billion by 2024, with the United States accounting for the largest market size at $11.66 billion. Additionally, the GenAI market is expected to grow to a total of $356.1 billion by 2030. Expansion at 46.5% CAGR From 2024 to 2030.

Over the past year, Nvidia has seen a significant surge in sales due to strong demand from tech giants like Google. Microsoft Corporation (MSFT), Metaplatforms (META), Amazon and OpenAI have invested billions of dollars in Nvidia’s advanced GPUs, which are essential for developing and deploying AI applications. Last January, META announced a significant project. Order 350,000 high-end H100 graphics cards From Nvidia.

As a result, NVDA Market share about 92% Data Center GPU Market for Generative AI Applications.

conclusion

NVDA’s recent 10:1 stock split had a significant impact on its valuation and market appeal. This strategic move not only made Nvidia’s stock more accessible to retail investors, but also fueled increased trading activity and demand, driving the stock price higher. On Friday, when the stock split took effect, the stock price soared 10 times, reflecting increased interest from investors.

NVIDIA’s strong financial performance, as evidenced in its Fiscal 2025 Q1 report, further solidifies its position in the AI ​​and data center markets. The company reported three-fold revenue growth, driven by massive demand for AI processors from major technology companies including Microsoft, Meta, Amazon, Google and OpenAI.

The chipmaker’s remarkable growth has made it the third-largest company by market capitalization globally, surpassing rivals such as AMZN and META.

Additionally, the company’s revenue and EPS for the fiscal year ending January 2025 are expected to be $120.55 billion and $27.07, up 97.9% and 108.9%, respectively, from the previous year. Analysts expect revenue and EPS to hit $159.55 billion and $35.90 in fiscal 2026, up 32.4% and 32.6%, respectively, from the previous year. With a healthy outlook for the future, NVDA continues to attract investors looking for long-term growth opportunities.

Moreover, the recent decision to raise its dividend by 150% demonstrates confidence in NVDA’s financial strength and growth prospects, making it more attractive to income-oriented investors. This move, combined with a stock split, appeals to a diverse investor base and reflects NVDA’s commitment to rewarding shareholders while positioning the AI ​​and semiconductor sectors for future growth.