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July 13, 2024

Tech Giants Set for More Stock Splits After Massive Runs

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Jan 15, 2024

Several prominent tech companies like Nvidia, Tesla, and Amazon are primed for stock splits in 2024 after huge share price gains over the past couple years. Stock splits don’t change the underlying business fundamentals, but can generate increased investor interest and make shares more accessible.

Lead Up to Potential Splits

A number of major tech stocks have absolutely skyrocketed since 2020. Nvidia stock is up over 200% in the last 2 years. Tesla shares have soared nearly 700% in that timeframe. Amazon has climbed 85%.

These huge runs have pushed the per share prices of these stocks into the thousands of dollars range. High nominal share prices can deter some investors that are uncomfortable buying fractional shares. Stock splits bring the per share prices down and often catalyze further upside.

Companies will usually do stock splits after big runs to reset share prices to more reasonable levels. Splits also signal that management is confident the stock will continue climbing.

Recent Tech Stock Split Examples

Company Pre-Split Price Split Ratio Post-Split Performance
Apple $500 4 for 1 Up 30%
Amazon $3,000 20 for 1 Up 10%
Tesla $1,200 3 for 1 Up 20%

As seen above, several major tech names have done splits over the past couple years after huge climbs. The splits reset share prices to lower levels and were followed by strong continued upside.

Nvidia

Nvidia stock currently trades around $230. The graphics chip leader could be the next big tech name to do a split, possibly a 5 for 1 bringing the price to around $45-50. Nvidia splits its shares when prices gets too lofty, as it last did a 4 for 1 split in 2021.

A Nvidia split would make shares more attainable for average investors plus signal confidence that the AI and metaverse trends will fuel massive growth. Analysts think the stock could surge 50% over the next year even without a split as demand booms for Nvidia’s GPUs and AI platforms.

“Nvidia remains one of our favorite secular growth stories in semis and we see continued beats and raises ahead driven by gaming, data center (AI) and the eventual ramp of automotive revenues over the next several years,” said 5-star RBC analyst Mitch Steves.

With $20+ EPS potential by 2026, Nvidia could trade above $400 in a bull case even at lower post-split levels.

Tesla

Like Nvidia, Tesla is no stranger to stock splits after huge share price gains. While Tesla enacted a 3 for 1 split as recently as 2020, its surging price momentum could warrant another split in 2024.

Tesla stock currently trades around $550. A potential 10 for 1 split would bring the price down to the $50-60 range. The lower nominal share price would open up Tesla to more small investors and likely also drive increased institutional interest.

Wedbush analyst Daniel Ives thinks a Tesla split is just a matter of time if the stock’s ascent continues. He has a $500 price target even without a split as Tesla disrupts the auto industry.

“We believe Tesla has the most impressive product roadmap out of any technology/auto vendor around,” Ives commented. He thinks the buildout of Tesla’s Berlin and Austin gigafactories will drive upside throughout 2023 and beyond.

If Tesla executes well on production and deliveries, the stock could potentially double over the next 2-3 years even after a split.

Amazon

Amazon joins Nvidia and Tesla as likely stock split candidates in 2024 amid its vastly expanding cloud business. Amazon has done both 3 for 1 and 20 for 1 splits over the past few years when its stock has climbed too high.

Amazon shares currently trade for around $100 after enacting a 20 for 1 split in 2022. But given Amazon Web Services’ soaring growth and the company’s habitual splits, it wouldn’t be surprising to see another split in 2024. A 5 for 1 split would put Amazon’s stock price around $20.

Raymond James analyst Aaron Kessler thinks Amazon has 17% upside to around $170 even without a split as growth reaccelerates. AWS revenue is expected to grow almost 30% annually through 2025. Consumers are also still flocking to Amazon’s marketplace.

“Ultimately, we expect AMZN shares to continue to work higher given the company’s expanding profitable retail and cloud businesses that are in the early stages of their growth cycle,” Kessler remarked.

Amazon stock rose over 25% after its last split in mid 2022. A potential 36% upside forecast followed by another split could send shares on another major run over the next few years.

What Comes Next After Splits

History has shown stock splits are usually precursors to strong continued share price appreciation. Resetting high nominal share prices makes stocks optically more attractive to investors.

Companies also tend to split their stocks after confirming strong outlooks and momentum. The signaling effect of splits gives investors confidence to buy more shares.

Nvidia, Tesla, Amazon, and other potential split stocks like Meta or Alphabet have dominant market positions and massive growth runways. Their underlying businesses will drive upside over the long-term regardless of optical impacts from stock splits.

But splits could further stoke investor enthusiasm and buying activity. This often translates into significant upside following splits, even with valuations at already lofty levels.

Big Tech has shown resilience with still more room for expansion. Potential stock splits in 2024 would likely perpetuate the sector’s leadership.

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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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