NVIDIA Stock Split: Will NVIDIA Stock Split in 2023?
|Current Market Cap||$1 T||Lower|
|Trading Volume||$45.1 M||Lower|
The Chances of a split in NVDA stock have risen significantly on account of accelerated revenue and price forecasts. Revenues are predicted to triple in the next quarter and sustain at a fairly high level over the next few years. As a consequence, some analyst forecasts have breached $1000 and many are at more than $600. These are levels at which NVDA becomes a prime candidate for a stock split. Read our detailed analysis along with the latest analyst summary.
Will NVIDIA Stock Split in 2023?
Net Rating = Yes% – No%
- August 30th: +44.5%
- September 1st: +61.3%
- September 22nd: +67.0%
While it’s challenging to predict with certainty, the rising stock price and the company’s recent financial performance make the possibility of a stock split in 2023 likely. Major Takeaways in favor and against a split
Arguments In favor of a split
- Stock Price: Analysts expect NVIDIA stock to touch $1000 in the coming months. If the stock price becomes too high and potentially inaccessible for many investors, the management might consider a split to make the stock more attractive to retail investors. A price between $150 to $300 has historically been seen as comfortable for many big tech companies, indicating that if the stock surpasses this range significantly, a split becomes more probable.
- Company Performance: NVIDIA’s recent performance, as reflected in its Q2 earnings summary, shows strong growth in revenues and earnings, suggesting that the company is on a solid footing. This might provide management with more confidence in considering a stock split.
Arguments against a Split
1. Historic Track record: NVIDIA has split its stock on five occasions since its listing on the Nasdaq. The most recent split was in 2021 when the stock was trading at around $800. Given that the company had not split its stock for nearly 14 years before the 2021 split, this suggests NVIDIA may not necessarily be in a hurry to split its stock frequently.
2. Market Conditions: The current market conditions are quite uncertain given the stance of the Federal Reserve and hence liquidity conditions may not favor improved stock performance after the split
3. Industry Trends: NVIDIA split the stock in 2021 which is also when numerous companies announced stock splits. That is not the case now and it is unlikely NVIDIA will buck the trend.
4. Emerging Competition – Competitors like AMD and Intel are ramping up their AI capabilities to challenge Nvidia’s position. Even major tech companies such as Google, Microsoft, and Amazon are developing their own AI chips, potentially reducing their reliance on Nvidia in the future.
5. Emerging Geopolitical Risks: The United States has banned the export of numerous NVIDIA products to China and Russia. China is perhaps one of the world’s largest markets. Recently, The Biden administration included some Middle Eastern countries as well. These pose a risk to revenues and also increase the probability of competitors gaining on NVDA.
In sum, NVIDIA is likely to announce a split if economic conditions improve this year. Most other conditions are favorable for a split at the moment.
- Market Capitalization: $1.12T
- Enterprise Value (MRQ): $1.163T
- Total Shares Outstanding: $2.47B
- Number of Employees: 26.196K
- Price to Earnings Ratio (TTM): 110.09
- Price to Revenue Ratio (TTM): 37.1229
- 52 Week High: $502.66
- 52 Week Low: $108.13
NVIDIA’s Latest Developments
- Nvidia CEO Jensen Huang has said that he believes the AI market could reach $600 billion by 2025. This is based on the growing adoption of AI in a variety of industries, including healthcare, finance, manufacturing, and transportation.
- The U.S. National Energy Research Scientific Computing Center (NERSC) is offering to rent Nvidia A100-based compute GPU nodes of the Perlmutter supercomputer with a 50% discount until the end of September. The offer is available to NERSC users only. The Perlmutter supercomputer is one of the fastest supercomputers in the world, and it is powered by 6,144 Nvidia A100 GPUs. Each GPU node on the Perlmutter supercomputer has 4 A100 GPUs.
- Nvidia Corp. has unveiled two strategic partnerships in India to expand AI services in the country.
- The first partnership involves collaborating with Reliance Industries Ltd. to develop AI models tailored to India’s diverse languages, addressing its 22 official languages and over 100 regional languages. Reliance plans to apply AI in its telecom arm, Jio Infocomm.
- Nvidia is teaming up with Tata Group to establish an AI cloud infrastructure in India, featuring Nvidia’s latest GH200 Grace Hopper super chip.
What is Stock Split and Is it Good or Bad for the Market?
Stock splits are a way to make more shares of a company’s stock without changing the company’s overall value. Even though the total value of the company stays the same, the price of each individual share becomes lower after a split.
Companies might do stock splits to attract investors who don’t want to spend a lot on a single share. By making the price per share lower, more people might be interested in buying.
During a stock split, the company creates more shares and gives them to existing shareholders. This can make it easier to buy and sell the stock because there are more shares available.
However, doing too many stock splits might not be a good idea. While it can make the stock seem more affordable, if a company does a lot of splits, it could create confusion or make people wonder if something’s wrong with the company’s value.
Additionally, as we know stock splits often happen when a stock’s price has gone up a lot. This makes the stock seem pricey to some investors. So, the split makes the stock look cheaper, which attracts more investors who want to buy.
However, this can also catch the attention of people who bet that the stock’s price will drop, called short sellers. They might see the split as a chance to bet against the stock and make money if the price falls. Sometimes, this can cause the stock’s price to go down a bit after the split.
Therefore, the stock split could be both good and bad for the market.
Will there be an NVIDIA Stock Split?
The NVIDIA stock price has been surging and analysts expect the stock to touch $1000 in the coming months. The higher the price of the stock lesser will be buyers and many buyers may not be able to afford to buy the stock at a higher price.
Therefore, in the event of NVIDIA stock becoming inaccessible to the majority of the buyers, the company’s management could possibly resort to splitting the stock. This could attract more buyers.
However, there has been no such announcement by NVIDIA management regarding the stock split. But the surge in the stock price of NVIDIA is a possible signal that the management could consider a stock split in the future.
When will there be an NVIDIA stock split next?
In theory, it is difficult to predict the next stock split. However, looking at past data, there are some scenarios under which a stock split by NVDA makes sense
- Stock Price > $300
- Solid Quarterly Results
NVIDIA Stock Split: Nvidia Stock Split History
Nvidia Corporation has a history of stock splits. Nvidia Corporation has announced stock splits on five different occasions in its trading history on Nasdaq. The stock split history is listed below for reference: –
Also Read: NVIDIA stock Forecast
NVIDIA Stock Split: Inference from past Splits
- A stock split is considered a good sign for the company. It has been observed that stocks get a short-term push just after the stock split. But that is not the case with Nvidia. At the time of the first split, the stock was trading around $185, and post-split it began trading at around $85 and it remained at the same level till the next split i.e. 17.9.2001. The stock did not reach this level again for the next 10 years.
- After a series of four stock splits in seven years between 2000-2007, NVIDIA announced the next stock split only in 2021. But Nvidia was not alone, Google, Apple, Amazon, Microsoft, and other big companies stayed silent for nearly two decades from 2000 to 2020. For example, Before the recently announced stock split, Amazon Inc last declared a stock split in 1999. Microsoft last announced a split in 2003. Similarly, Ford Motors last announced a split in 1994.
NVIDIA Stock Split: Last Stock Split in July 2021
- Nvidia announced a 4:1 stock split on May 26th, 2021 along with its first-quarter results. The stock price was trading around $800 and then it came back to around $200. The primary reason for announcing the stock split was to make it more accessible to small retail investors. Although various brokers do allow for fractional share purchases, a retail investor is more comfortable buying complete shares. Also, a price range between $150 to $300 is seen as comfortable (Looking at NVDA, Amazon, and Alphabet Stock Splits).
- NVDA’s share price closed at $186.12 on 20.7.2021, and in the last one-year stock has given a 93% return. The share price touched an all-time high of $333.76 on 19th November 2021. So in less than a four-month period, the share price almost doubled, but the rally could not be sustained due to uncertainties in the global market and various other factors like inflation fears in the US and Russia-Ukraine war.
- The split in 2021 was different from other splits as this was on the backdrop of very strong quarter results. First-quarter revenue in 2021 was $5.66 billion, greater than the $5.3 billion expected and it rose 84% YoY. Earnings per share also surged 106% Gaming segment revenue increased 106% while data center revenue surged 79% YoY. So the company had shown very strong performance in the last quarter and even in the year prior to announcing the split in 2021 and that is the main reason why the stock shot up more than 180% in less than four months post announcing the split.
- Share price at the time of all splits barring the most recent one was in the range of $50-100 and post-split it hovered around $30-50. The same was not the case in 2021, thanks to an extraordinary run-up of the stock and the share price was around $780. It clearly signals that the split in 2021 was meant to make it more accessible to investors while all the previous ones were carried out with some other intention, maybe to dilute the shares outstanding.
Q2 Earnings Summary
- Total revenue of $13.51 billion, an increase of 101% from the previous year and 88% from Q1.
- Data Center revenue stood at a record $10.32 billion, marking a 171% increase from the previous year and 141% from Q1.
- GAAP operating income surged by 218% QoQ and 1,263% YoY.
- Non-GAAP operating income rose by 155% QoQ and 487% YoY.
- GAAP earnings per diluted share: $2.48, up 854% YoY and 202% QoQ.
- Non-GAAP earnings per diluted share: $2.70, up 429% YoY and 148% QoQ.
- Highlights from Various Segments:
- Data Center: Record revenue, new product announcements including the NVIDIA GH200 Grace Hopper Superchip, NVIDIA L40S GPU, and partnerships with companies like ServiceNow, VMware, and SoftBank for AI initiatives.
- Gaming: Revenue of $2.49 billion, the release of the GeForce RTX 4060 GPUs, and the introduction of NVIDIA Avatar Cloud Engine for Games.
- Professional Visualization: Revenue of $379 million, with new RTX GPUs based on the Ada Lovelace architecture announced.
- Automotive: Revenue of $253 million, featuring partnerships and product integrations like NVIDIA DRIVE Orin in the XPENG G6 Coupe SUV.
- Shareholder Returns: NVIDIA returned $3.38 billion to shareholders through 7.5 million shares repurchased for $3.28 billion and cash dividends. The company has $3.95 billion remaining for share repurchases, with an additional $25 billion approved by the Board of Directors.
- Upcoming Dividend: NVIDIA will distribute a quarterly cash dividend of $0.04 per share on September 28, 2023.
- Outlook for Q3:
- Expected revenue of $16.00 billion (±2%).
- Gross margins are projected at 71.5% (GAAP) and 72.5% (non-GAAP), with a variance of 50 basis points.
- Estimated operating expenses are around $2.95 billion (GAAP) and $2.00 billion (non-GAAP).
- CEO Statement: Jensen Huang, NVIDIA’s CEO, emphasized the onset of a new computing era with a shift towards accelerated computing and generative AI. He highlighted the company’s GPUs, Mellanox networking, and CUDA AI software stack as the backbone for this computing infrastructure.
NVIDIA Stock Latest News
- Nvidia is teaming up with Mercedes-Benz to design digital twins for real-life factories. This will allow Mercedes-Benz to simulate and optimize its production processes before they are implemented in the real world.
- Nvidia Says Native Resolution Gaming is Out, DLSS is Here to Stay. DLSS, or Deep Learning Super Sampling, is a technology that uses AI to reconstruct images from lower-resolution inputs. This means that DLSS can deliver image quality that is comparable to native resolution but with a significant performance boost.
- Nvidia CEO Jensen Huang recently touted India as a major AI market in a bid to hedge China risks. Huang said that India has the data, the talent, and the ambition to become a leader in AI. He also said that Nvidia is committed to working with the Indian government and businesses to make AI a reality in India.
- Nvidia CEO Jensen Huang has sold another chunk of Nvidia shares, bringing his total sales in the last few days to $120 million. This is his fourth sell in the last few days. After his recent sales, Jensen Huang still owns over 2% of the company.
- Oracle Cloud Infrastructure (OCI) offers NVIDIA GPU-accelerated compute instances. These instances are powered by NVIDIA GPUs and are designed for demanding workloads such as machine learning, artificial intelligence, and high-performance computing.
- Vietnamese Prime Minister Pham Minh Chinh has urged Nvidia to invest in Vietnam and make the country its manufacturing hub in Southeast Asia. Chinh made the request during a working trip to Silicon Valley where he met with Nvidia CEO Jensen Huang.
NVIDIA Analysts Price Targets
|NVIDIA Stock Forecast for the Next 12 Months||$625|
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