Some of the world's biggest companies saw their shares reach record highs in recent years. The top performance wasn't just a stroke of good luck. Investors piled into these players for their earnings gains, market share, and future prospects. The only problem is, at a certain point, the stock price reaches such a high level -- often into the thousands of dollars -- that it becomes difficult for some investors to buy.
Enter the stock split. By offering additional shares to current holders, a company lowers the price of each individual share. But the overall market value of the company -- and the value of your total holding if you're a current shareholder -- remain the same. Two trillion-dollar technology giants completed these operations last year, and thanks to their solid track record and promising work today, these stocks could continue to gain. In fact, these stock-split players may skyrocket in a bull market. Let's check them out.
1. Amazon
Amazon (AMZN 0.75%) is a leader in two markets growing in the double digits: e-commerce and cloud computing. And the company is doing what's necessary to stay on top. In e-commerce, Amazon is making delivery speed a priority as rapid delivery is linked to customers ordering more -- and more frequently. In the most recent quarter, Amazon said strength in sales of essentials came thanks to its progress in this area.
So how is Amazon getting faster? The company recently shifted its fulfillment model to a regional one from a national one, bringing inventory closer to customers. The company says this move is lowering its cost to serve -- and, by making customers happy, it should drive revenue growth too.
Amazon Web Services (AWS), the company's cloud computing business, generally has been Amazon's biggest profit driver, and that could continue over the long term. To ensure that, Amazon is going all in on artificial intelligence (AI), designing tools to make it a snap for clients to apply AI to their daily businesses. For example, Amazon Bedrock allows clients to access foundation models and customize them for their own needs -- without having to manage infrastructure.
Amazon already is benefiting from its recent moves in e-commerce and at AWS. In the third quarter, net sales, net income, and operating cash flow soared. It's easy to imagine Amazon's e-commerce and cloud customers spending more as the general economic environment improves -- and that could make Amazon a big winner in the next bull market.
2. Alphabet
If you've ever told someone to "Google it" when they've asked you a question, you already know something about Alphabet (GOOG -3.33%) (GOOGL -3.37%). The company is the parent of top search engine Google, generating most of its revenue through advertising. Alphabet also brings in revenue from YouTube advertising, Google Cloud, and sales of certain hardware products.
Though some have worried about Google losing market share to rivals, so far, that hasn't happened. And the company's brand strength and steady leadership position -- with more than 90% of the search market -- make me pretty confident Google will stay on top.
And right now Alphabet is working to make Google search even better. The company has launched an effort to bring generative AI to search, for example, adding videos and images into responses. Through AI, Google aims to answer a broader range of questions. All of this should make Google a better place than ever for clients to advertise.
Even in today's difficult economy, Alphabet has continued to grow, with revenue climbing 11% in the most recent quarter. Google Cloud saw a slowdown from the previous quarter's 27% gain -- but still managed to advance 22% year over year.
And after free cash flow and return on invested capital last year fell from their peak, this year they've climbed.
GOOG Return on Invested Capital data by YCharts
This indicates Alphabet is investing wisely and benefiting from those investments.
Alphabet's track record of earnings growth, strength through difficult times, and top position in the search market are all reasons to be confident about the company's future -- and performance once the economy improves. And all of this could help this stock-split stock skyrocket in a market favoring growth.
