Investing

3 Reasons NVIDIA Is About to Announce a Stock Split

NVIDIA Stock Chart
Shutterstock / Piotr Swat

Tomorrow, NVIDIA (NASDAQ:NVDA) is set to announce first quarter earnings and there is a very real change its share price pops above the $1000 price ceiling the stock has been flirting with the past two months.

Wall Street analysts expect NVIDIA revenue to come in at $24.59 billion dollars for the quarter ($5.58 earnings per share). If the worlds leading chip maker extends its quarter outperformance streak to 6 quarters and guidance for the back half of the year is bullish, there is no doubt the stock will shoot past $1000 per share.

NVIDIA Stock Will Pop

Analysts have been steadily increasing their estimates for NVIDIA’s earnings, reflecting growing optimism about first quarter performance. But the big catalyst will be NVIDIA’s ability to start inking sales deals for their next generation Blackwell chips.

Reports have NVIDIA making up to 40,000 full blown GB200 NVL72 AI servers which can command around $3 million a piece. That would bring in $120 billion in revenue in 2025, which along is double the expected revenue the company will do in 2024. Eyes will be on expected production the second half of this year and  how confident management is demand for the servers and fulfilling the supply.

AI artificial intelligence three dimensional electronic intelligent hardware chip scene
Source: HelloRF Zcool / Shutterstock.com

NVIDIA Stock Split History

At its current stock price of $950, NVIDIA is well beyond the price level that the stock split the previous 5 times.

  • July 20th, 2021: 4:1
  • September 11th, 2007: 3:2
  • April 7th, 2006: 2:1
  • September 12th, 2001: 2:1
  • June 27th, 2000: 2:1

Just looking at its most recent split in July of 2021, NVIDIA split 1 share priced around $600 and gave shareholders 4 shares valued after the split for $150. When the July 2021 split was announced and before the split was official, the stock price jumped over 20%.

Today’s price is over 55% higher that it was in July, 2021 and 27% higher than when the 2021 stock split became official. When earnings on our heels tomorrow, a share price spike will be all the more reason for management to announce s stock split. Even if the shares take a skid, history still suggests a split is likely.

Make shares Accessible

Stock splits do not create shareholder value or any tangible value at all, but they do lower share prices and make investing in the company more accessible. Psychologically, retail investors can be scared away from stocks trading at high prices and feel more certain buying more shares with a lower sticker price.

Conversely, lower share prices allow management more flexibility when it comes to offering stock equity to employees. Past stock splits kept the share price below $300 and its entirely possible management finds that price level most beneficial for the firm. Also having lower share prices can quality a stock to be included in indices, like the Dow Jones Industrial Average, which is a price-weighted index.

There is plenty to pay attention to tomorrow when NVIDIA announces earnings, but non bigger than the expected demand for 2025. If the market likes what it hears, a stock split should be coming soon after.

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