Stock splits have historically shown strong outperformance compared to the S&P 500, with companies typically seeing a 25.4% increase in stock price in the 12 months following a split announcement. NVIDIA recently announced a 10 for 1 stock split and has seen a 43% increase in its stock price, outperforming the S&P 500’s 3% gain. Super Micro Computer and Microsoft are also key players in the AI economy and potential candidates for stock splits.
Super Micro Computer specializes in high-performance computing platforms for AI applications, with a unique approach to product development that allows for quick integration of the latest technologies. The company’s market share is expected to grow to 17% by 2026, with analysts forecasting a 48% annual growth in earnings per share through fiscal 2026. Despite a premium valuation, investing in this AI stock could be a smart move.
Microsoft, the largest business software company globally, has a dominant market share in software sales and enterprise resource planning software. The company’s Microsoft 365 platform and Dynamics suite are key contributors to its success. Microsoft has made significant investments in generative AI, with its Copilot products automating tasks in productivity and enterprise applications. The company’s Azure subsidiary is also a major player in cloud infrastructure services, with strong growth potential in generative AI applications.
Wall Street expects Microsoft to grow earnings per share by 14.7% annually through fiscal 2027, but its current valuation of 38.7 times earnings may be considered expensive. Investors may want to wait for a more favorable valuation before considering investing in this potential stock split candidate.
Overall, stock splits have historically led to strong performance, with companies like NVIDIA, Super Micro Computer, and Microsoft all showing promising growth prospects in the AI economy. Investors should keep an eye on these companies for potential stock split announcements and consider their growth potential in the AI market before making investment decisions.
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https://www.fool.com/investing/2024/06/20/nvidia-complete-stock-split-2-ai-stocks-next-split/