Nvidia shares (NVDA) began trading Monday on a new Base split 10 to 1, revising the stock’s closing price Friday from $1,208.88 to $120.88. The stock closed up almost 1% on the first day following the split.
The split means that owners of Nvidia common stock held as of market close Thursday received 10 shares for every share they owned. For example, if a shareholder owned four shares of Nvidia on Thursday, they now own 40 shares after the split.
Stock splits make owning stock more affordable by lowering the price of individual shares without diluting the value of existing shareholders’ total holdings.
âThe stock split is going to make Nvidia much more accessible to a lot of these retail traders,â Matt Amberson of Option Research & Technology Services told Yahoo Finance last Thursday. âNow you rarely see a stock above $1,000 with 50% implied volatility, so options prices are extraordinarily high, so options traders are really looking forward to the split.â
Nvidia split comes after company’s total market valuation briefly eclipsed $3 trillion on Wednesdaypushing the chip company past Apple to become the second most valuable publicly traded U.S. company.
Nvidia shares have soared on the explosion of interest in generative AI that began when OpenAI launched its ChatGPT software in late 2022. Since then, hyperscalers like Amazon (AMZN), Google (GOOG, GOOGLE) and Microsoft (MSFT) are fighting to get their hands on Nvidia’s hardware to power their own generative AI platforms.
This caused Nvidia’s revenue to explode. In the first quarter, Nvidia announced adjusted earnings per share of $6.12 on revenue of $26 billion, jumps of 461% and 262%, respectively, from the same period last year.
Nvidia’s data center revenue last quarter grew 427% year over year to $22.6 billion, representing 86% of the company’s total revenue for the quarter. Nvidia’s gaming segment, previously its largest business, reported revenue of $2.6 billion.
And Nvidia continues to develop new hardware to retain customers. On June 3, CEO Jensen Huang announced that an upgraded version of its Blackwell AI platform, called Blackwell Ultra, would arrive in 2025, as well as an entirely new platform called Rubin, due in 2026. And in 2027 , the company will release an Ultra version of the Rubin hardware.
Stock splits are considered by investors as a sign of strengthand as a result, companies that split their shares typically outperform the S&P 500 in the year following their announcement.
On average, stocks rise 25% in the 12 months after announcing their split, compared with an average return of 12% for the S&P 500 over the same period, according to Bank of America analysis. This has been true âacross all market regimes,â BofA investment and ETF strategist Jared Woodard wrote in a note to clients.
The trend notably includes the period from 2000 to 2009, in the middle of the unwinding of the tech bubble. Nvidia shares are up about 27% since the company announced its split on May 22.
Nvidia’s stock split comes as AMD (AMD) and Intel (INTC) are going after it, announcing their own AI hardware and presenting their future product roadmaps as alternatives to Nvidia’s. Nvidia customers also develop their own AI chips to train and run AI models to help reduce the cost of purchasing new Nvidia products.
But it’s not just about hyperscalers. Meta (META), You’re here (TSLA), and many other major tech and auto companies are looking to snap up Nvidia’s chips to train and deploy AI models for everything from recommendation engines to self-driving software.
Additionally, Nvidia says it has a growing total addressable market beyond tech companies, including government organizations, research institutes, etc., meaning there could be a lot more runway to browse.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
Josh Schafer is a reporter for Yahoo Finance. Follow him on @_joshschafer.
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