For investors, one of the most gripping phenomena in recent years has been the resurgence of stock splits. These maneuvers typically follow robust business performance and are closely aligned with stock price appreciation. Despite not affecting a company’s intrinsic value, stock splits chiefly aim to sustain an affordable share price for the mass retail investor.

Reflecting on the past years manifest the momentum of this trend as several prominent companies split their shares, including the likes of:

• Amazon: 20-for-1 split June 3, 2022
• DexCom: 4-for-1 split June 10, 2022
• Shopify: 10-for-1 split June 28, 2022
• Alphabet: 20-for-1 split July 15, 2022
• Tesla: 3-for-1 split Aug. 24, 2022
• Palo Alto Networks: 3-for-1 split Sept. 13, 2022
• Monster Beverage: 2-for-1 split March 27, 2023
• Celsius Holdings: 3-for-1 split Nov. 15, 2023

The stellar performances of select stocks in the preceding year tantalize the prospect of more stock splits in 2024.

Image source: Getty Images.

Exploring Potential Stock Splits

Nvidia: Dominating the AI Market

Nvidia (NASDAQ: NVDA) is renowned for spearheading graphics processing units (GPUs) that bring video games to life. Over time, the company has tailored its chips to deliver the computational power necessary for cloud computing, data center utilities, and most recently, generative artificial intelligence (AI).

Data from New Market Research reveals Nvidia’s substantial command of the machine learning processor market, with approximately 95% market share. This hegemony hints at the company’s favorable position to lead the generative AI domain.

In its fiscal 2024 third quarter (ended Oct. 29), Nvidia reported record revenue of $18.1 billion, marking a staggering 206% year-over-year surge. Its diluted earnings per share (EPS) also leaped by 1,274%. While comparisons are skewed due to tepid prior-year results, they underscore the vast potential ahead.

Notably, Nvidia’s stock skyrocketed by 239% in 2023, propelled by the excitement surrounding its AI-fueled outcomes. Over the past decade, the company has witnessed phenomenal growth, with revenue catapulting by 1,480% and net income soaring by 6,190%. Consequently, Nvidia’s stock price has surged by more than 13,650%, currently trading at $531 as of Tuesday’s close. Despite this, it still holds a reasonable price-to-earnings-to-growth (PEG) ratio of less than 1 – a benchmark for an undervalued stock.

While Nvidia last split its stock in May 2021 when it was trading at approximately $600 per share, just 13% higher than its current price, its current trajectory and historical precedence signify that another split announcement may be on the horizon.

Microsoft: Trailblazing AI Advancements

Microsoft (NASDAQ: MSFT) is celebrated for its Office suite and omnipresent Windows PC operating system. Notably, the company propelled itself into the generative AI realm by making a significant investment in ChatGPT parent OpenAI last year, culminating in the launch of Copilot, a suite of AI-powered assistants designed to streamline routine, time-consuming tasks. These strategic moves commenced the ongoing AI race.

Stellar demand for Microsoft’s AI tools catalyzed growth for Azure Cloud, its foremost cloud infrastructure service. In addition to outpacing its competitors in growth during the third quarter, Microsoft specifically attributed three percentage points of this growth to AI demand.

In its fiscal 2024 first quarter (ended Sept. 30), Microsoft’s revenue surged by 13% year over year, while EPS jumped by 27%. However, with Copilot’s general release taking place only in November, its impact on financials is yet to be fully realized.

Driven by sagacious AI initiatives, Microsoft’s stock soared by 57% in 2023. Delving deeper into history, the company has achieved commendable growth over the past decade, with revenue escalating by 177% and net income amplifying by 294%. Consequently, Microsoft’s stock price has soared by nearly 817%, currently priced at approximately $376 as of Tuesday’s close. Although the stock is trading at 33 times forward earnings, its illustrious track record justifies a modest premium.

Having last conducted a stock split in 2003 after a sequence of nine splits, and rarely permitting its stock price to exceed $175, Microsoft has now hit a new all-time high with a stock price more than twice that. Given its robust growth trajectory, the company might just follow suit with its tech counterparts and initiate a stock split in 2024.

Meta Platforms: AI Renaissance

Meta Platforms (NASDAQ: META) saw a triumphant 2023, benefiting from multiple catalysts that propelled its stock. The company’s vigorous cost-cutting measures yielded compelling outcomes, while digital advertising began recovering from a historic downturn. Furthermore, its established expertise in AI enabled Meta to adeptly pivot and capitalize on the technology, leading to the development and subsequent release of Llama AI on major cloud services for a fee. The introduction of Llama AI 2 late last year, coupled with rumors of Llama 3’s impending debut in early 2024, reflects the company’s continued AI prowess.

During the third quarter, Meta’s revenue surged by 23% year over year to $34.1 billion, and its EPS skyrocketed by 168% to $4.39.

Meta Platforms: A Decade of Growth and Potential

Advantage+ and Expansion

Meta, formerly known as Facebook, is riding the digital wave as ad spending bounces back, with the company’s Advantage+ AI tools garnering attention. A trial run saw a significant increase in return on ad spending and a notable decrease in incremental costs, drawing more advertisers to its social media platforms.

A Decade of Remarkable Growth

Over the past decade, Meta has witnessed exponential growth, with a staggering 1,260% increase in revenue and a striking 1,700% surge in net income. This has translated to a robust stock price gain of 493%, with the stock hovering around $357, just 6% shy of its all-time high.

Potential Stock Split in 2024

Given its consistent growth and the integration of AI, Meta could potentially follow in the footsteps of its big tech counterparts in conducting a stock split in 2024, demonstrating the company’s potential for further expansion and investment value.

Investment Considerations

Potential investors may be eyeing Meta, but it’s essential to remember that past performance is not indicative of future results. It’s wise to conduct thorough due diligence before making any investment decisions.