Nvidia (NVDA 1.56%) shares soon will trade at about a 10th of last week's price -- and for good reason. The company just completed a 10-for-1 stock split, and that's why as of the opening of today's trading session, you can get in on Nvidia stock with a little more than $100 instead of more than $1,000.
Stock splits, by offering more shares to current holders, lower the price of each individual share, making it easier for a broader range of investors to buy a particular stock. With its split, Nvidia joined the ranks of many technology companies that had seen their shares soar -- so made the move to rein them in and potentially prepare for a whole new era of growth. Companies from Alphabet to Amazon and Tesla all have performed stock splits over the past few years.
Seeing Nvidia's share price roar past $900 earlier this year, investors speculated about a potential split, and when it was announced -- along with a stellar earnings report -- late last month, the stock surged past $1,000. So now that Nvidia has completed this much-awaited operation, here's what to look for next.
Image source: Getty Images.
Details about Nvidia's stock split
First, a few details about the stock split. Nvidia issued the new shares to current holders after the close of trading on June 7. So today they will begin trading at the split-adjusted price. This doesn't change the total market value of Nvidia, which last week surged to $3 trillion to surpass that of Apple and become the second-biggest U.S. company (temporarily -- it's since dipped to settle just behind the iPhone maker).
And the move doesn't change the value of your investment if you bought shares of Nvidia prior to the stock split. If you had one share back then, you now have a total of 10 -- but the investment still is worth about $1,200.
If you decide to buy or sell Nvidia shares today or at any point down the road, you'll note one difference. If you're a buyer, you can easily make a small investment in Nvidia without having to go the route of buying fractional shares. And if you want to sell, the split has offered you new flexibility: Shareholders who own $1,200 of Nvidia right now can lower their stake without completely closing out the position. You couldn't do that last week when one share was worth that amount.
Now, let's move on to what's next for Nvidia. The stock split is positive for Nvidia and shareholders -- but don't expect it to push the stock higher or lower today or down the road. These operations are mechanical movements, so they don't act as a catalyst for share performance.
NASDAQ: NVDA
Key Data Points
Here's what could boost Nvidia stock
But here's the good news. Other elements are ready to drive Nvidia shares higher and for the long term, and these are linked to Nvidia's biggest business: designing graphics processing units (GPUs) and other products and services for artificial intelligence (AI) customers.
Two catalysts to watch in particular are the upcoming releases of Nvidia's H200, a GPU that Nvidia says nearly doubles the inferencing capabilities of the current H100. The company is preparing to ship the H200 in the second quarter and says demand is surpassing supply.
Then, next up is something AI customers and the investing community have been eagerly awaiting: Nvidia's developed a whole new architecture, called Blackwell, and along with this, its highest-performing chip ever. The Blackwell architecture could result in 25 times lower total cost of ownership for customers and better energy consumption than the current Hopper architecture.
Blackwell demand
Nvidia is preparing to launch Blackwell later this year, and the company says demand for the platform also is greater than supply -- and this situation probably will continue into next year.
News regarding the launches of these products as well as the path of revenue moving forward are the catalysts that could determine whether Nvidia shares continue roaring higher in the coming months. The company's work with governments pursuing sovereign AI projects also may offer the stock direction.
All of this means that, yes, this recent stock split was a wise decision by Nvidia and could encourage more investors to get in on this growth story. But Nvidia's ability to keep its top market position and grow revenue at a rapid pace are what should guide the stock in the near term and over time -- and considering the company's track record and future prospects, these elements could help Nvidia shares continue to roar higher.
