Tech stock splits are becoming a trend, with companies like NVIDIA (NASDAQ: NVDA) and Broadcom (NASDAQ: AVGO) experiencing significant stock price increases after their splits. Among the Magnificent 7 tech companies, Meta (NASDAQ: META) and Microsoft (NASDAQ: MSFT) are strong candidates for a split. We analyze which stock is more likely to split. 

The Next Magnificent 7 Stock Split Is Likely Meta

Here are some of the key discussion points from 24/7 Wall Street Analysts Eric Bleeker and Austin Smith.

• There’s a bit of stock split mania sweeping the markets. NVIDIA briefly jumped nearly 50% in the month following its split. Broadcom recently announced a stock split and saw its price rise more than 20% in the days that followed.
• Clearly, executives at big technology companies are watching. So, the question is of the big Magnificent 7 companies, which one is most likely to split next?
• Now, it’s worth remembering that splitting doesn’t fundamentally change the value of companies. 
• It has practical benefits like easier employee share compensation, more access for retail traders, and can make stocks more liquid in options markets. 
• But the bottom line is splits have recently become something of a branding exercise. They’re a signal of strength to the markets.
•  Of the Magnificent 7 aside from NVIDIA – Apple, Alphabet, Tesla, and Amazon recently split. Tesla announced in August 2022 and didn’t see as much reaction the next day, But Amazon, Alphabet, and Apple all saw price jumps of 5 to 10% the day after announcing their split.
• So, with those stocks having recently announced a split, let’s remove them from consideration.
• That leaves us with Meta and Microsoft.
• Believe it or not, Microsoft hasn’t split its stock since February 2003 and Meta has never announced a stock split.
• So, these are actually both really strong candidates to split their stock in the year ahead.
• Right now Microsoft trades for a bit more than $400 while Meta trades for around $500 per share.
• Between the two, we believe Meta will be the first company to announce a split.
• First, it’s simply more expensive than Microsoft right now on a per-share basis.
• Second, as we noted earlier – splits are effectively branding events and Meta has been fighting a “branding” campaign with investors. Investors didn’t buy into the company’s Metaverse vision and punished the stock harshly, for example. 
• Becoming the next stock to split following companies like Broadcom and NVIDIA continues aligning Meta with AI as a trend, which is clearly a priority as Zuckerberg has gone onto podcasts and done significant amounts of media around the company’s AI efforts. 
• There is no guarantee that a split would drive Meta’s shares higher as it has for NVIDIA and Broadcom, but in the current environment, the company’s position as the next Magnificent 7 stock that could split is certainly a nice “cherry on the top” owning a company that already has significant tailwinds.

Transcript:

Eric, there’s a tech stock split mania sweeping the markets.

NVIDIA briefly jumped nearly 50% in the month following its split.

Broadcom announced their own stock split and saw sales rise more than 20% on the days that followed.

Clearly, executives at big tech companies are watching this trend.

And with so many tech stocks doing so well in the last few years, we’re talking about share prices of $600, $900, over $1,000. So they’re ripe for splitting. They’re at the levels where these companies typically split.

So my question is, of the Magnificent Seven companies, all of whom are seeing fantastic growth in their share price, which one is the most likely to split next?

Yeah, of course, as we’ve talked about, splitting doesn’t fundamentally change the value of the company.

It has practical benefits like easier employee share compensation, more access for retail traders, and can make stocks more liquid in options markets.

But the bottom line is stock splits have recently become something of a branding exercise for companies. They signal strength to the market.

So of the Magnificent Seven stocks, aside from NVIDIA, which, as you mentioned earlier, had recently announced a stock split, Apple, Alphabet, Tesla, and Amazon have also split since 2020.

Tesla announced in August 2022 and didn’t see much of a reaction the next day, but Amazon, Alphabet, and Apple, they all saw price jumps of 5% to 10% the day after announcing their stock split.

So with those stocks having recently announced splits, we’ll just remove them from consideration for now.

That leaves us from the Magnificent Seven with Meta and Microsoft.

And believe it or not, even with Microsoft’s run in helping more than a $3 trillion company, they haven’t had a stock split since February 2003.

And Meta, with its outstanding performance, has never announced a stock split, which would tell you they are definitely overdue.

Both these stocks are strong candidates to split their stock in the year ahead.

Microsoft’s trading firm, around $400 a share right now, meta strength around 500.

But between the two, I would say Meta is the stronger bet to announce a stock split first.

The reasons why, well, this one’s simple, but it’s more expensive. It’s trading for about $500, whereas Microsoft’s at $400 a share.

But second, and most importantly, as I noted earlier, stock splits have effectively become branding events for companies, and Meta has been fighting a branding campaign for a while.

Investors didn’t buy into the company’s metaverse vision and they punished the stock harshly. That has big impacts with employee retention and other areas.

Becoming the next stock to split, following recent companies like Broadcom and NVIDIA that are leaders in AI, continues aligning Meta with AI as a trend, which is clearly a priority as Zuckerberg, he’s been going and doing things like podcasts and doing significant amounts of media around Meta’s AI efforts.

So there’s no guarantee that a split would drive Meta’s share price higher as it has for companies like NVIDIA and Broadcom. But in the current environment, the company is positioned as the next Magnificent Seven stock that could split.

Well, Austin, it’s certainly a nice cherry on top, owning a company that already has significant tailwinds.

So if I’m watching the next Magnificent Seven stock split, I’m putting my money on Meta.

Eric, I think it’s a fantastic call. And as you’ve talked about, Mark Zuckerberg and Meta have been on a bit of a PR circuit the last year, and it appears to be paying off.

While they did cut expenses, and financials have been incredibly robust on the back of AI optimization, and they’ve seen a lot of cash flow, all of this is adding up to a pretty strong appreciation in shares, especially when compared to Microsoft, which was probably the next Magnificent Seven contender.

So Meta’s up 76% in the last year. Microsoft’s only up 35%. Meta is about to touch $500 a share. Microsoft is still about $400 a share.

And given all the PR and press that Zuckerberg has been doing and the momentum that Meta stock has behind it, I think calling out Meta as the next Magnificent Seven stock to split is a fantastic choice.

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