Possible Stock Splits in 2025: 2 AI Giants Up 677% and 797% Over the Last Decade to Buy Now
Saturday, Jan 18, 2025 6:17 am ET
4min read Meta Platforms (META) and Microsoft (MSFT) have been on a tear over the past decade, with their share prices climbing 677% and 797%, respectively. Neither company has split its shares in that time, and their stock prices now sit firmly in the mid-three figures. As they continue to execute at a high level, a stock split could be on the horizon in 2025, adding momentum to their already impressive runs.
Meta Platforms: Up 677% from January 2015
Meta, formerly known as Facebook, has transformed significantly over the past decade. The company has invested heavily in virtual and augmented reality, as well as artificial intelligence. While VR/AR has not yet produced significant growth, AI has been instrumental in Meta's continued success. AI has helped improve user engagement and ad targeting, making Meta's recommendation algorithm more effective. Recent advancements in AI, such as the Llama large language model, have opened the door for more advanced ad campaign tools.
Meta's strong revenue and earnings growth (22.5% and 66% respectively through the first nine months of 2024) indicate the value of its AI investments. Its forward P/E ratio of 23.4 suggests that the stock is reasonably valued, considering the company's growth prospects. Meta's AI investments have helped it maintain a competitive advantage in the social media and advertising space, allowing it to keep up with and even surpass its competitors.
Microsoft: Up 797% from January 2015
Microsoft has also made significant investments in AI, vaulting its cloud computing division, Azure, to the forefront of the competition in winning new customers focused on AI. Azure revenue has accelerated recently due to strong demand for its AI services. Microsoft plans to spend roughly $80 billion on AI-enabled data centers in fiscal 2025, a significant step up from the $55.7 billion spent in fiscal 2024.
Microsoft's AI investments have helped it maintain a competitive edge in the cloud computing and software industries. Its strong financial performance and growth prospects indicate the value of its AI investments. While other companies, such as Amazon Web Services (AWS) and Google Cloud Platform (GCP), have also made significant investments in AI, Microsoft has been particularly successful in leveraging AI to maintain its competitive edge.
Potential Risks and Challenges
While Meta Platforms and Microsoft have both seen impressive growth and have strong AI investments, there are still potential risks and challenges they face:
1. Regulatory Risks: As AI becomes more prevalent, governments worldwide are increasingly focusing on regulating the technology to mitigate potential risks. This could lead to new laws and guidelines that impact how Meta Platforms and Microsoft operate and innovate in the AI space.
2. Technological Challenges: The rapid evolution of AI technology could lead to unexpected breakthroughs or setbacks that affect the performance of Meta Platforms and Microsoft. Additionally, the increasing demand for AI infrastructure could lead to supply chain issues or increased costs, which could hinder their growth.
3. Ethical Concerns: AI systems can inadvertently perpetuate or amplify existing biases and inequalities, leading to public backlash and reputational damage for companies involved in AI development. Meta Platforms and Microsoft must ensure that their AI systems are fair, unbiased, and respect user privacy to maintain user trust and avoid potential legal and reputational risks.
In conclusion, Meta Platforms and Microsoft have both seen impressive growth over the past decade, driven in part by their significant investments in AI. While there are potential risks and challenges associated with the AI sector, both companies are well-positioned to continue their strong performance in 2025. As they continue to execute at a high level, a stock split could be on the horizon, adding momentum to their already impressive runs. Investors should consider adding these AI giants to their portfolios before a potential stock split pushes their share prices even higher.
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