When it comes to investing in stocks, some companies can create so much long-term value that their stock price soars into the thousands of dollars. This can make it challenging for smaller investors to buy full shares, so these companies often undergo a stock split to increase the number of shares in circulation and reduce the price per share accordingly.
In 2024, artificial intelligence (AI) is playing a significant role in creating value for a select few companies. Two notable examples are Nvidia (NASDAQ: NVDA) and Broadcom (NASDAQ: AVGO). Nvidia’s stock has already seen a remarkable 171% increase, while Broadcom’s stock has gained 59% this year. This exceptional performance, combined with years of success, prompted both companies to announce stock splits recently.
Nvidia, with a stock price above $1,200, executed a 10-for-1 stock split, allowing investors to purchase one share for just $130. On the other hand, Broadcom, trading above $1,700, announced a 10-for-1 stock split to take effect on July 15, enabling investors to buy a single share for around $170.
Nvidia is considered a leader in AI, with CEO Jensen Huang often referred to as the “Godfather of AI.” The company’s data center revenue has soared, driven by the success of its latest GPUs, particularly the H100. Nvidia is set to release new GPUs, such as the GB200, expected to revolutionize AI inference capabilities.
While Nvidia’s stock seems expensive based on its current P/E ratio, the company’s future earnings outlook appears promising. As for Broadcom, its diverse portfolio, including hardware and software solutions, has contributed to significant revenue growth, particularly in the AI segment.
Investors considering Nvidia or Broadcom should weigh the potential for future growth against current valuations. Both companies have shown impressive performance but may face challenges in sustaining their momentum in the second half of 2024.
If you’re looking to invest $1,000 in Nvidia or other stocks, it’s essential to conduct thorough research and consider expert recommendations. The Motley Fool’s Stock Advisor service provides valuable insights into top-performing stocks and has a history of outperforming the market since 2002.
In conclusion, the stock market’s unpredictable nature offers both risks and rewards. By staying informed and leveraging reputable resources like Extreme Investor Network, investors can make informed decisions to navigate the ever-changing landscape of finance.