Investors tend to get excited when a company splits its stock, and not just because the end result is a cheaper share price. Instead, a stock split is an implicit indicator of a good business. Only substantial share price appreciation makes a stock split necessary, and companies rarely wind up in that position by chance.

Several high-profile stock splits have occurred in the last few years, including:

  • Apple (AAPL -0.35%): 4-for-1 split in August 2020. 
  • Amazon (AMZN 3.43%): 20-for-1 split in June 2022. 
  • Alphabet (GOOGL 10.22%) (GOOG 9.96%): 20-for-1 split in July 2022. 
  • Churchill Downs (CHDN 0.16%): 2-for-1 split in May 2023. 
  • Dexcom (DXCM -9.90%): 4-for-1 split in June 2022. 
  • Monster Beverage (MNST 0.41%): 2-for-1 split in March 2023. 
  • Nvidia (NVDA 6.18%): 4-for-1 split July 2021. 
  • Palo Alto Networks (PANW 0.91%): 3-for-1 split in September 2022. 
  • Shopify (SHOP 1.11%): 10-for-1 split in June 2022. 
  • Tesla (TSLA -1.11%): 3-for-1 split in August 2022. 

Here are two stock-split growth stocks where Wall Street sees substantial upside.

1. Nvidia: 135% implied upside

Nvidia has seen its share price skyrocket this year amid a surge in excitement surrounding artificial intelligence (AI). But even after climbing 220% year to date, the stock still carries a consensus rating of "buy" among Wall Street analysts, according to CNN Business, and the highest 12-month price target of $1,100 per share implies a 135% upside from its current price.

Nvidia is best known for its graphics processing units or GPUs, chips that are synonymous with AI infrastructure. Indeed, Nvidia holds a 95% market share in machine learning processors, according to New Street Research, and the company has consistently delivered leading results at MLPerf training and inference events, the standard in benchmarking AI technologies from different vendors. But investors need to understand that Nvidia is more than a mere chipmaker.

The company has long provided pre-trained models and software libraries to supplement its hardware, and it recently formalized that strategy by launching subscription cloud and software products. DGX Cloud allows enterprises to provision Nvidia supercomputing infrastructure as a service, Nvidia AI Foundations helps developers build generative AI models, and the Nvidia AI Enterprise software suite accelerates the development and deployment of AI applications across a range of use cases, from recommender systems for retail to intelligent avatars for customer service.

Suffice it to say that Nvidia has evolved into a one-stop shop for enterprise AI, but its roots are in video game graphics, and the company still dominates that market. Nvidia holds more than 90% market share in workstation graphics, and it accounted for 84% of discrete desktop GPU sales in the first quarter, according to Jon Peddie Research.

Collectively, Nvidia sees a $1 trillion addressable market between hardware, software, and services, a colossal figure compared to the $33 billion in revenue the company earned over the last 12 months. But shares currently trade at 35.5 times sales, a substantial premium to the three-year average of 22.8 times sales, so I doubt shareholders will see triple-digit returns over the next 12 months.

In fact, I question whether Nvidia can outperform the market over the next five years from its current valuation, and I say that as a shareholder myself. Investors who want to buy this stock should wait for a better opportunity.

2. Alphabet: 53% implied upside

Alphabet shares have climbed 49% year to date, borne higher by the same AI tailwinds as Nvidia. But the stock still carries a consensus rating of "buy" among Wall Street analysts, according to CNN Business, and the highest 12-month price target of $200 per share implies a 53% upside from its current price.

Alphabet owns six products that serve over 2 billion users, including Google Search, Chrome, and YouTube. Those engaging platforms make the company a valuable advertising partner, so much so that Alphabet is the largest adtech company in the world. It accounted for nearly 30% of digital ad spend last year, and it will account for roughly the same this year, according to forecasts from eMarketer.

Alphabet is also gaining a share in cloud computing. Google Cloud Platform collected 11% of cloud infrastructure and platform services revenue in the second quarter, up from 8% one year ago and 6% three years ago. While not the only factor, AI expertise has contributed to those share gains. Industry analysts recently recognized Google as a leader in AI infrastructure and cloud AI developer services, and its strong competitive position in those categories should continue to drive growth in the future.

Here's the bottom line: Adtech and cloud computing sales are forecast to grow at roughly 14% annually through 2030. Alphabet should be able to match that pace at a minimum, a reasonable estimate given that its revenue increased at an annualized 18.5% over the last five years. That makes its current valuation of 5.9 times sales look reasonable, and it's a discount to the three-year average of 6.5 times sales.

There is no guarantee Alphabet will return 53% over the next 12 months, but patient investors willing to hold the stock for at least five years should consider buying a few shares today.