Nvidia (NASDAQ: NVDA) has soared in recent years, and the stock added to its gains recently when it announced what many investors had been waiting for: a stock split. The company decided to launch a 10-for-1 stock split to bring its shares down to a level that would make it easier for a wider range of investors to buy. These transactions involve issuing more shares to current holders to make this happen.
Before the deal, Nvidia had surged to over $1,000 per share, a level that could be a psychological barrier for some investors and a difficult buy for those looking to take a small position. Today, with Nvidia shares trading around $120, those concerns have disappeared. So while stock splits aren’t catalysts for stock performance, they can be a positive development for a company.
But Nvidia’s big moves this year aren’t over. In fact, Nvidia has something big planned for the second half of the year. I predict this move from the artificial intelligence (AI) chip giant will be far bigger than the stock split — and will give you a great reason to buy the stock. Let’s see what’s in store.
Nvidia’s lower share price
Of course, getting access to Nvidia for a lower price per share, thanks to stock splitIt’s exciting, but it’s important to remember that divisions don’t change anything business valuation:Nvidia is not cheaper today than before the split. In fact, a stock split doesn’t change anything fundamental.
But this coming shift will have an impact. Let’s start with some context. Nvidia is already the world leader in AI chips, with its graphics processing units (GPUs) holding 80% of the market. Indeed, Nvidia’s GPUs are the fastest on the market, powering critical AI tasks like training and inference, the processes that help large language models solve complex tasks.
Nvidia also sells a variety of related AI products and services that make it the go-to destination for those starting an AI project. All of this helped the company grow its revenue and net profit by triple digits quarter after quarter.
Now for my prediction: Nvidia’s upcoming launch of its Blackwell architecture and its best chip yet is much bigger news for the company and could be a significant catalyst for the stock in the near term as well as over time as that platform grows revenue.
Blackwell could be a game-changer as it represents a completely new way of powering AI, achieving incredible performance at up to 25 times lower cost and power consumption than Hopper, the previous system. This is a critical feature because these savings reduce an AI client’s overall costs, potentially making the Nvidia system the more economical choice over time.
Blackwell’s Revolutionary Innovations
Blackwell includes six transformative innovations, including the world’s most powerful chip; the next generation of Nvidia NVLink to offer high-speed communication between 576 GPUs; a preventive maintenance system to maximize the operation of the system; And much more. And the Blackwell GPU delivers up to four times faster training and 30 times faster inference than Nvidia’s current leading chip, the H100.
And now for the really good news: Nvidia CEO Jensen Huang says demand for Blackwell has outpaced supply, and he expects that to continue next year. The launch strategy, which makes Blackwell available in more than 100 OEM and OEM systems, could ensure a strong start. All of this gives us reason to be optimistic about the platform’s debut and its contribution to revenue in the coming quarters.
Blackwell’s launch could also reassure investors who fear competitors could take market share from the chip giant, as it should give Nvidia a significant head start.
So while Nvidia has been in the news for its stock split lately, Blackwell’s upcoming launch is much bigger news — and news that could help this already top-performing AI stock continue its gains in the second half of the year and beyond. And that makes Nvidia a great buy now, even after its 150% surge in the first half.
Should You Invest $1,000 in Nvidia Right Now?
Before buying Nvidia stock, consider this:
THE Motley Fool Stock Advisor The team of analysts has just identified what they believe to be the 10 best stocks for investors to buy now…and Nvidia wasn’t one of them. The 10 stocks selected could produce monster returns in the years to come.
Consider when Nvidia made this list on April 15, 2005…if you had invested $1,000 at the time of our recommendation, you would have $759,759!*
Equity Advisor provides investors with an easy-to-follow blueprint for success, including portfolio construction advice, regular analyst updates, and two new stock picks each month. Securities Advisor the service has more than quadrupled the return of the S&P 500 since 2002*.
*Stock Advisor returns June 24, 2024
Adria Cimino has no position in any of the stocks mentioned. The Motley Fool Ranks and Recommends Nvidia. The Mad Motley has a disclosure policy.
Prediction: This Nvidia H2 Deal Will Be Much Bigger Than The Stock Split was originally published by The Motley Fool
