With its four-for-one stock split fast approaching, the stock of semiconductor and microchip manufacturer Nvidia (NASDAQ:NVDA) continues to climb to new heights.
The Santa Clara, California-based company’s share price has gained 46% since mid-May when it announced that it would undertake a four-for-one stock split on July 19.
NVDA stock will begin trading on a split-adjusted basis on July 20. Bank of America (NYSE:BAC) recently raised its price target on Nvidia’s shares to $900, stating that the chipmaker is well-positioned to capitalize on the evolution and widespread adoption of artificial intelligence.
Heading into the year’s second half, Nvidia seems to be firing on all cylinders and its stock, which currently trades at just over $800 per share, appears to be unstoppable.
Acquisition Approval
Prior to Nvidia breaking out the stock-split announcement, NVDA stock had been consolidating for most of this year and struggling to break above $550 per share. Holding the stock back was ongoing uncertainty about the company’s $40 billion acquisition of British chip designer Arm Holdings. Regulators in the United Kingdom, Europe and the U.S. continue to scrutinize the deal to determine its impact on competition and the future direction of the global microchip sector, which is experiencing a damaging shortage right now.
However, NVDA stock was pushed down by media reports that the Chinese government is considering delaying the Arm Holdings acquisition. Nvidia, which maintains that it wants the deal to close early next year, has submitted an application to Chinese regulators asking for approval of the deal.
But Chinese regulators have said that they could take up to 18 months to decide whether to approve the deal,. As a result, a final resolution of the transaction could occur later than previously expected.
Complicating matters within China is that Arm Holdings has a joint venture with Chinese private equity firm Hopu Investments in the Asian nation, called “Arm China.” Arm China is headquartered in Shanghai, meaning China’s Ministry of Commerce and China’s State Administration for Market Regulation have the right to review the Nvidia deal.
Time will tell how things shake out, but, if finalized, the combination of Nvidia and Arm Holdings would create the biggest player in artificial intelligence in the world. That would be good for Nvidia’s shareholders.
It’s worth noting that, in June,Nvidia’s rivals Broadcom (NASDAQ:AVGO), Marvell Technology (NASDAQ:MRVL) and MediaTek (TPE:2454) each publicly expressed support for Nvidia’s acquisition of Arm Holdings, providing a big vote of confidence in the deal.
Strong Business Segments
Beyond the Arm Holdings purchase, Nvidia is doing exceptionally well across its various business segments. The company’s gaming, data center and artificial intelligence units are all performing very well.
Analysts, on average, currently expect Nvidia’s revenues to grow by 49% during its current fiscal year. Some analysts forecast that Nvidia’s data center business alone will generate $30 billion of annual revenues by 2025. That kind of growth is underpinning the rise of NVDA stock.
Additionally, Nvidia recently made headlines around the world after it launched a new $100 million supercomputer, purportedly the most powerful in the United Kingdom, to conduct healthcare research using artificial intelligence.
Nvidia says it will make the ultra-fast supercomputer, called “Cambridge-1,” available to Britain’s National Health Service (NHS) for use in conducting advanced research into digital biology, genomics and quantum computing. The company has said that the computer could even be used to accelerate future prescription drug discoveries.
Buy NVDA Stock to Capitalize on Its Momentum
Nvidia has a lot of momentum behind it right now. With its impending stock split, Nvidia’s acquisition of Arm Holdings, its market leading position in artificial intelligence, and the company’s strong performance across multiple business units, Nvidia is in a great position right now.
Consequently, investors should move to capitalize on the momentum behind Nvidia and buy the firm’s shares ahead of its upcoming stock split. Investors who are late to Nvidia’s party should not be upset, since NVDA stock will become easier to buy once its split is completed on July 19.
Disclosure: On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
