Nvidia and Broadcom: Stock Split Performance Review

Nvidia and Broadcom completed stock splits in June and July 2024, respectively, to make their shares more accessible to investors. Despite the split, Nvidia's stock price has risen over 40% and Broadcom's has increased by 15% in the past year. Nvidia's success can be attributed to high demand for its AI chips and strong execution of its Blackwell architecture and chip launch.

Nvidia and Broadcom completed stock splits in June and July 2024, respectively, to make their shares more accessible to investors. Despite the split, Nvidia's stock price has risen over 40% and Broadcom's has increased by 15% in the past year. This growth can be attributed to several factors, including high demand for their products and strong execution of key initiatives.

Nvidia, the world's leading AI chip designer, saw its stock price soar in 2023 before the split. The company completed a 10-for-1 stock split on June 7, 2024, bringing the shares down from about $1,200 to $120. Since then, Nvidia's stock has experienced ups and downs but delivered a gain of more than 40%. The primary driver behind this performance has been the ongoing high demand for its graphics processing units (GPUs) and related products. Additionally, the strong execution of the Blackwell architecture and chip launch, which generated $11 billion in revenue in its first quarter of commercialization, has significantly contributed to Nvidia's success. Although concerns about potential headwinds, such as import tariffs or a decrease in AI spending, have eased, these factors have not deterred investors from flocking to Nvidia. The company's market cap has recently reached $4 trillion, making it the first company to achieve this milestone.

Broadcom, a networking giant, also saw its share price surge before the split. The company executed a 10-for-1 stock split on July 12, 2024, bringing the shares down from about $1,700 to $170. Broadcom's stock has climbed in the double digits since the split, rising more than 65%. The company's success can be attributed to demand from AI customers, particularly big cloud service providers. Broadcom's revenue from AI products surged 77% in the most recent quarter to $4.1 billion. The company's networking expertise and wide range of products, including switches, routers, and network interface cards, have been key growth drivers as cloud service providers ramp up their AI platforms.

Both Nvidia and Broadcom have completed successful post-split years, scoring double-digit gains. While Nvidia is slightly less expensive from a valuation standpoint than it was a year ago, Broadcom's valuation has advanced. These AI players remain reasonably priced, considering their earnings track record and long-term prospects in the growth market. The current environment supports the idea of more gains ahead, but it is impossible to guarantee what these stocks will do next. Both companies are well positioned to win in the AI market over the long run.

References:
[1] https://finance.yahoo.com/news/nvidia-broadcom-heres-top-ai-013000508.html
[2] https://www.nasdaq.com/articles/3-scorching-hot-artificial-intelligence-ai-stocks-primed-stock-split-one-which-familiar