The stock market has been unpredictable in recent years, with many companies enjoying immense growth in 2021 amid COVID-19 lockdowns only to lose all they had gained the following year after a macroeconomic-fueled sell-off in 2022. However, easing inflation and excitement over budding markets like artificial intelligence (AI) seem to suggest the worst declines are over for now.
The Nasdaq Composite surged 43% in 2023 and looks likely to continue trending up in the new year. Meanwhile, companies that have recently split their shares are attractive investment options, as the move is often followed by significant gains.
So, here are two stock-split stocks the smartest investors are buying for 2024.
1. Nvidia
Nvidia's (NVDA -3.89%) business has exploded in recent years, with its shares soaring more than 1,000% since 2018. Stellar growth led management to trigger a four-to-one stock split in July 2021, its fifth split since 2000. And the company appears to just be getting started.
Over the last 12 months, Nvidia emerged as one of the biggest names in artificial intelligence, achieving an estimated 90% market share in AI chips. According to Grand View Research, the AI market is projected to expand at a compound annual growth rate (CAGR) of 37% through 2030, which would see it surpass a $1 trillion valuation before the decade's end.
Meanwhile, Nvidia has gotten a head start on other chipmakers, supplying its hardware to most of the market. Increased demand for AI graphics processing units (GPUs) has seen the company's earnings soar. In the third quarter of fiscal 2024 (ended October 2023), Nvidia posted revenue growth of 206%, with operating income up more than 1,600% thanks to a spike in chip sales in its data center segment.
Data by YCharts
This chart shows Nvidia's earnings could hit $24 per share by fiscal 2026. That figure multiplied by its forward price-to-earnings ratio of 40 yields a potential stock price of $960, projecting growth of 94% over the next two fiscal years.
As a leading chipmaker, Nvidia has a lucrative role in tech. Its hardware powers multiple sectors, from AI models to cloud platforms, video consoles, laptops, and more. Its solid long-term outlook makes it a stock-split stock too good to pass up for the new year.
2. Amazon
Amazon (AMZN 2.29%) has had four stock splits since its initial public offering in 1997, with its most recent one occurring in June 2022 in a 20-to-one split.
The company has enjoyed immense success over the years by leading two crucial sectors: e-commerce and cloud computing. Online retail on its own is expected to top $3 trillion in 2023 and expand at a CAGR of 10% until at least 2028. Meanwhile, Amazon dominates the industry in multiple countries.
E-commerce hit some roadblocks during an economic downturn in 2022. However, Amazon's recent quarterly results indicate the industry has returned to growth. In Q3 2023, the company posted revenue growth of 13% year over year, beating Wall Street forecasts by $1.5 billion.
The increase was primarily owed to an impressive turnaround in its North America segment, which posted more than $4 billion in operating income after suffering $412 million in losses in the year-ago period.
In addition to e-commerce, Amazon holds the largest market share in cloud computing with Amazon Web Services (AWS), which it is using to carve out a promising position in AI. The tech giant is heavily investing in the technology, introducing a diverse range of AI tools on AWS over the last year and announcing a venture into chip development.
Data by YCharts
Amazon has massive growth potential over the long term and is only made more attractive with its price-to-sales ratio of 2.8. The chart above shows the figure is the lowest among some of the most prominent names in tech, suggesting Amazon's stock offers the most value. And with that, the retail giant is a no-brainer investment for 2024.
