What makes stocks soar over a short period? Something big has to happen that provides a catalyst that causes shares to take off.
Two of the most widely followed stocks on the market could soon have such catalysts. Big developments for Apple (AAPL 2.21%) and Nvidia (NVDA +0.26%) are only days away. Should you buy both stocks now?
Major events for these two tech giants
Apple's big news should be announced on June 10. That's when the company's annual Worldwide Developers Conference (WWDC) begins. While the event runs through June 14, Apple will deliver its keynote presentation on the first day.
Speculation has reached a fever pitch about what Apple might announce at this year's WWDC. Many industry observers expect the company to introduce major new artificial intelligence (AI) capabilities. Apple CEO Tim Cook hinted in the May quarterly conference call, "We can't wait to reveal what we have in store." He then commented about Apple's investments and opportunities in generative AI, adding fuel to the fire of anticipation the company will talk about new generative AI tools at the WWDC.
Apple's upcoming major news is shrouded in mystery. No one knows for sure everything the company will announce at its event next week (although there has been no shortage of predictions). It's a different story for Nvidia, though. Investors know exactly what's on the way.
Nvidia will conduct a 10-for-1 stock split after market close on Friday, June 7. All record holders of its common stock at the market close on Thursday, June 6, will get another nine shares. Nvidia will begin trading at a lower split-adjusted share price at the market open on Monday, June 10. This is arguably the most highly anticipated stock split of the year.
Buy Apple and Nvidia stocks ASAP?
Should you buy Apple and Nvidia as soon as possible to get in on the stocks before their major developments in the next few days? There are some straightforward arguments why the answer could be yes.
NASDAQ: AAPL
Key Data Points
Apple could wow investors with its new AI capabilities and extend the stock's current rebound. Some think the company could even spark a multiyear super cycle of iPhone upgrades.
Nvidia's stock split could attract enough retail investors who didn't buy the stock in the past because of its high share price and ignite yet another surge for the high-flying stock. The stock split could also set the stage for Nvidia to be added to the Dow Jones Industrial Average, a move that would spur mutual funds and exchange-traded funds (ETFs) that track the index to buy the stock.
However, there's no guarantee that Apple's and Nvidia's big news will provide strong catalysts. Apple's AI announcements could be underwhelming. Rumors are already circulating that the company won't introduce any new hardware.
As for Nvidia, many online brokerages already support buying and selling fractional shares, which lessens the impact of a stock split. I don't think investors should buy Apple and Nvidia solely because of their big developments on the way.
NASDAQ: NVDA
Key Data Points
The long-term case for these stocks
Granted, it's possible that Apple's WWDC announcements and Nvidia's stock split could cause temporary spikes for both stocks. The best approach for investors, though, is to focus on the long-term prospects for these companies. And those prospects appear to be good in both cases.
Regardless of what Apple reveals next week, the company could be in a great position to lead the charge in the edge AI market. So far, the focus on AI has primarily centered on cloud applications. Edge AI involves running AI apps on devices where data is created and viewed.
More than 2.2 billion Apple devices, including iPhones and iPads, are used worldwide. With the right AI strategy, the company could be a huge winner in the edge AI market.
Nvidia remains the 800-pound gorilla in the AI chip market. I think the company's pace of innovation could enable it to stay on top for years to come. If AI delivers on its potential (and I suspect it will), Nvidia should continue to be a great stock to own over the long term.
