NVIDIA Corporation, a semiconductor giant, reported first-quarter financial results that surpassed analyst estimates. The company also announced a 10-for-1 stock split, which could potentially lead to its inclusion in a major stock index. The split was not unexpected given the company’s stock performance over the past year and its history of stock splits. Analysts, including Freedom of Capital Markets’ chief strategist Jay Woods, had predicted the split in advance.
Woods noted that this is the fifth time NVIDIA has split its stock since 2000, with previous splits ranging from 2-for-1 to 4-for-1. The 10-for-1 split announced this time was larger than expected. The split is seen as a way to make the stock more appealing to retail traders and possibly increase its chances of being included in the Dow Jones Industrial Average.
Following a CNBC interview with CEO Jensen Huang, where the possibility of a stock split was not ruled out, speculation grew. The split is seen as a psychological boost for investors rather than a change in the company’s valuation. Woods believes that NVIDIA is now a frontrunner for inclusion in the Dow, potentially replacing outdated technology companies like Intel. Other candidates for replacement include Cisco Systems and IBM.
Woods emphasized the symbolic importance of being included in the Dow Jones index, despite other widely monitored indices like the S&P 500 and the Nasdaq. The split makes NVIDIA a strong candidate for inclusion in the index, and both Woods and other analysts believe it is a matter of when, not if, the company will be included.
In terms of stock performance, NVIDIA shares have seen significant growth over the past year and the past five years, significantly outperforming competitors like Intel, Cisco, and IBM. Intel, in particular, has seen minimal gains over the past year and negative growth over the past five years.
Overall, the stock split and strong financial performance have positioned NVIDIA as a leading player in the semiconductor industry, with potential for further growth and inclusion in major stock indices like the Dow Jones Industrial Average.
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https://www.benzinga.com/top-stories/24/05/39011237/exclusive-nvidia-dow-jones-inclusion-a-matter-of-when-will-it-replace-intel