Another tech sector leader is gearing up to split its stock. Nvidia (NASDAQ:NVDA), the company responsible for powering much of this year’s artificial intelligence (AI) revolution, is about to enact a 10-for-1 stock split. After reporting record earnings and blowing past Wall Street estimates on several key metrics, the Silicon Valley darling will begin trading on a split-adjusted basis on June 10, 2024.
If you hold a position in NVDA stock, this development won’t negatively impact your holdings. But it will likely generate a trading frenzy as retail investors rush in to stock up on the newly discounted shares.
What’s Happening With NVDA Stock?
So far, it has been a good day for NVDA stock. As of this writing, shares are up more than 10%, likely due to Nvidia’s earnings success. But investors also shouldn’t overlook the potential catalyst that is the Nvidia stock split. A rush of activity from new investors could provide a convenient boost, helping the momentum continue. As I recently reported for InvestorPlace, high-growth names often split their stocks when their share prices reach hard-to-attain levels.
This new development may also help Nvidia achieve a fresh milestone: Becoming a member of the Dow Jones Industrial Average. “Once Nvidia shares fall to the low $100-ish range after the split takes effect on June 7, the stock could make sense as a new Dow component,” speculates Paul La Monica of Barron’s. “It would seem to be a fairly easy decision to make.”
If Nvidia makes it into that exclusive market club, rival chipmaker Intel (NASDAQ:INTC) could lose its spot in the Dow as well. That would follow six months of steady decline for INTC stock.
Why It Matters
All told, just about everything looks good for Nvidia right now. The combination of the successful earnings beat and the momentum for its upcoming stock split should help NVDA stay in the green for the foreseeable future. Additionally, CEO Jensen Huang recently highlighted just how strong demand is for Nvidia’s chips. This suggests that Nvidia is destined to keep climbing, even as rival chipmakers attempt to take market share for themselves.
Today should remind investors just how well off Nvidia is right now. The company’s earnings smash has helped power a market rally. Now, new investors will be able to double down on NVDA stock as soon as the split takes effect.
On the date of publication, Samuel O’Brient did not hold (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.
