Stock Split Watch: 3 Hot Tech Stocks That Could Split in 2024

One of the most exciting developments for investors over the past few years has been the resurgence in popularity of stock splits. Overall, these moves followed strong business performance, which led to equally strong share price gains. Since stock splits have no effect on the fundamental value of the business, the main reason companies cite is the desire to keep the stock cheap for the average retail investor.

Looking back over the past few years helps highlight this trend, with a number of high-profile companies splitting their stakes. These include:

• Amazon: 20-1 split June 3, 2022
• Dexcom: 4-to-1 split June 10, 2022
• Shopify: 10:1 split June 28, 2022
• alphabet: 20:1 split July 15, 2022
• Tesla: 3-to-1 split August 24, 2022
• Palo Alto Networks: 3-to-1 split September 13, 2022
• Monster Drink: 2:1 split March 27, 2023
• Celsius Holdings: 3:1 split November 15, 2023

A look at some of the best-performing stocks from last year shows that there could be more stock splits in 2024.

Image source: Getty Images.

1. Nvidia

nvidia (NVDA -0.20%) He is best known for pioneering the graphics processing unit (GPU), which renders life-like images in video games. Over the years, the company has been tweaking its chips to deliver the computing power needed for cloud computing and data center use, and most recently, generative artificial intelligence (AI).

Nvidia currently controls about 95% of the market for processors used in machine learning, a nascent field of AI, according to data compiled by New Market Research. This means the company is well positioned to lead the generative AI market.

Recent financial results appear to support this view. In the third quarter of fiscal 2024 (ending October 29), Nvidia record Sales rose 206% year over year to $18.1 billion, and diluted earnings per share (EPS) surged 1,274% to $3.71. The previous year’s lukewarm results distorted the comparison, but help illustrate the long runway ahead.

Nvidia has a long history of impressive growth, but excitement over its AI-powered results has sent its stock up 239% in 2023. The results are even more remarkable when we consider the performance over the past 10 years. Revenue increased 1,480% and net profit increased 6,190%. That growth has led to a surge in Nvidia’s stock price, up more than 13,650% at $531 as of Tuesday’s market close. Despite its performance, Nvidia still trades with a reasonable price-to-earnings-growth (PEG) ratio of less than 1, a benchmark for cheap stocks.

The company’s most recent stock split was announced in May 2021, when the stock was trading at around $600 per share, just 13% above its current price. If things continue along their current trajectory (and history is any indication), it won’t be long before Nvidia announces its next stock split.

2. Microsoft

microsoft (MSFT 1.00%) It is best known for its Office suite of productivity tools and the ubiquitous Windows PC operating system. But last year the company saw great success in generative AI. After acquiring a large stake in ChatGPT parent OpenAI, Microsoft launched Copilot, a suite of AI-based assistants designed to streamline mundane and time-consuming tasks. This move started the current AI arms race.

High demand for Microsoft’s AI tools has helped fuel the growth of its “big three” cloud infrastructure services, Azure Cloud. In addition to outperforming its competitors in the third quarter, Microsoft also delivered 3 percentage points of growth directly on AI demand.

During the first quarter of fiscal 2024 (ending September 30), Microsoft’s revenue increased 13% and EPS increased 27% year-over-year. However, Copilot wasn’t available for general release until November, meaning its impact hasn’t yet hit its financial statements.

Microsoft has had a long history of enviable growth, but the company’s advanced AI moves have boosted its stock price by 57% in 2023. If we take a step back, the results become even more compelling. Over the past 10 years, revenue has increased 177% and net profit has increased 294%. This sent Microsoft’s stock price up nearly 817%, reaching about $376 as of Tuesday’s close. The stock is selling for 33 times forward earnings, but given its history, it deserves a bit of a premium.

The company had nine stock splits between 1987 and 2003, and its stock price rarely exceeded $175. Microsoft hasn’t split its stock since 2003, but its current stock double That price. And the company has only just scratched the surface of the AI ​​opportunity, which suggests there’s more stock upside to come.

Microsoft hasn’t revealed any plans for a stock split, but given its strong growth, this could be the year it splits its expensive stock along with its tech peers.

3. Meta platform

2023 was the year of: meta platform (meta 1.30%), there are several catalysts that help lift the stock. The company’s cost-cutting campaign has shown dramatic results, digital advertising has begun to recover from a historic drought, and AI has gone viral. Each of these factors helped Meta regain its footing, which led to a 194% increase in the stock price.

Meta’s long history in AI has helped the company leverage that expertise. Meta quickly developed Llama AI, which was released for a fee to all major cloud services. Llama AI 2 was released late last year, and Llama 3 is rumored to be released in early 2024.

In the third quarter, Meta’s revenue of $34.1 billion increased 23% year-over-year, while EPS surged 168% to $4.39. Last year, digital advertising spending grew only 7.8%. As advertising spending increases again, Meta’s growth will accelerate further.

Then there’s Advantage+, an AI tool designed to empower advertisers on Meta’s social media platforms. It has become one of the fastest-growing advertising products in Meta’s history. Recent testing showed a 35% increase in ad spend revenue; Diminish Incremental cost per purchase. By streamlining and automating advertising campaigns, Meta simplifies processes, increases profitability, and attracts more advertisers.

The growth of the meta last year was remarkable, but the past decade has been even more impressive. Sales increased 1,260% and net profit soared 1,700%. This sent Meta’s stock price up 493%, and as of Tuesday’s market close, the stock was worth about $357, within 6% of its all-time high. Not bad considering Meta’s stock is selling for a PEG ratio of less than 1.

Given its history of consistent growth and relationship with AI, 2024 could be the year that Meta conducts a stock split along with its big tech peers.