Nvidia (NVDA -0.46%) will be executing a 4-for-1 stock split, and shares are expected to start trading on a split-adjusted basis on July 20. The stock closed at $751.19 on July 19 with a $468 billion market cap. The price-to-earnings ratio was 89, based on a $751 share price. The company had blowout earnings last quarter, reporting over 88% year-over-year revenue growth and a 33.77% net profit margin. The share price ran to a high of $835 before pulling back. Is Nvidia stock a buy now?
It's easy to see why some investors would shy away from Nvidia at these levels. The stock price has delivered nearly 5,000% returns over the past decade. A $10,000 investment would be worth approximately half a million dollars today. But the company is firing on all cylinders, and when you look under the hood, you will find that its future looks very bright, which can arguably justify the premium share price. One key risk to note is that Nvidia is attempting to acquire ARM Holdings from SoftBank (SFTB.Y 2.01%) and has bumped into regulatory pushback. With that said, Nvidia partners with ARM, and they should do fine regardless. Nvidia has its hands in gaming, cloud data centers, cryptocurrency, machine learning, artificial intelligence (AI), professional visualization, electric vehicles (EVs), autonomous driving, 5G, and more!
Of course, you do not own more of Nvidia because of the stock split. If you cut a pizza into four slices, you still have one pizza. With that said, lower share prices can equate to more pin action because of options contracts, and I think the company looks attractive here as a long-term investment.
In the video I break down the key fundamental highlights that will power Nvidia over the next decade. I'll also chart out Nvidia's technicals and provide an opinion on where I think the stock price is headed from here.
*Stock prices used were the closing prices of July 19, 2021. The video was published on July 19, 2021.