What's Next for Stocks and Other AI Plays?

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Nvidia ( NVDA ) is joining its megacap tech peers, becoming the fourth Magnificent 7 stock to split since 2022.

The chip giant's 10-for-1 stock split, which will begin trading on Monday, followed a significant price increase, with shares up 212 percent in the past year. The massive rally pushed Nvidia into the $3 trillion club, becoming only the third US company to reach that milestone.

“A stock split is a vote of confidence by management that the stock will retain its value, as the stock is. [price] generally increases,” said Howard Silverblatt, senior analyst at S&P Dow Jones Indices.

Adam Koons, chief investment officer at Winthrop Capital, expects the split to spur interest from retail investors, but cautions that the influx of retail traders could be volatile for the stock.

“They can be a little bit more quick and emotional with their buying and selling decisions, so starting to dilute your institutional buyers can increase volatility,” Coons told Yahoo Finance.

Evercore ISI's Julian Emanuel sees rising volatility as an opportunity to buy Nvidia — a stock he sees as a “generational opportunity” and the era's “marquee” technology stock.

“While high-profile divestitures often fuel stock volatility — speculative buying and profit-taking around the event — thinning the trees within the post-divestment forest can trigger buying opportunities for the patient investor. Yes,” Emanuel wrote.

Historically, stock splits have typically been faster for companies that implement them, 25% compared to 12% a year later, according to a Bank of America analysis. Average return according to the analysis of

Nvidia's skyrocketing gains have driven the broader market to record highs. Its rally has accounted for about a third of the S&P 500's year-to-date return, and more than a quarter of the S&P 500's return in the month of May, according to Silverblatt.

Wall Street has gained more momentum in stocks since its earnings report on May 22. Last week, Bank of America's Vivek Arya raised his price target to an all-time high of $1,500.

“We're at the beginning of what I think will be a decade of accelerated computing … We think the spend could be between $250 billion and $500 billion a year, and Nvidia is leading the charge,” Arya told Yahoo Finance. is leading,” Arya told Yahoo Finance.

Nvidia's stock split signals not only management's confidence in the chip giant, but excitement and optimism about the growth potential of the broader AI industry.

As Lam Research ( LRCX ) CFO Doug Bettinger explained to me at Bank of America's Global Technology Conference last week, we're still “very, very early” in the AI ​​investment cycle.

That next round of growth—or the second wave of AI—is expected to see companies begin to integrate AI into their planning and enterprise spending.

“More and more companies are adopting hybrid cloud architectures, and focusing on building advanced applications, and starting their journey into enterprise AI,” Nutanix ( NTNX ) CEO Rajeev Ramaswamy told me.

For investors looking to add to their portfolios, Arya likes Broadcom ( AVGO ), Marvell Technology ( MRVL ), Micron ( MU ), and Arm ( ARM ) as winners of the continuing wave of AI. are In a note to clients last month, Arya wrote that he sees growing needs in computing, networking and memory as “multi-year growth drivers” for the group.

Sienna Smith Yahoo is an anchor in finance. Follow Smith on Twitter. @SeanaNSmith. Suggestions on deals, mergers, worker conditions, or anything else? Email seanasmith@yahooinc.com.

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