One effect of the boom in artificial intelligence (AI) stocks is that it has also prompted companies to approve stock splits. The most prominent of these were Nvidia, which executed a 10-for-1 forward stock split in June 2024, and Broadcom, which carried out its own 10-for-1 split one month later.
Amid considerable stock price growth, another AI company has risen to a high nominal price, making it likely to split before the end of the year.
Image source: The Motley Fool.
The AI-driven stock split most likely to occur next
Looking ahead, investors should watch for a stock split at semiconductor equipment maker ASML (ASML +1.86%).
Many analysts call ASML "the most important company you've never heard of." However, while some believe Wall Street is sleeping on this stock, "unknown" stocks rarely reach a nominal price above $1,600 per share.
Moreover, the long-term increases in the stock price are unlikely to stop. Its stock price is up by around 120% over the last year, likely because foundries need more of ASML's equipment to produce the world's most advanced AI chips, prompting more orders from companies like Taiwan Semiconductor Manufacturing, Intel, and Samsung.
NASDAQ: ASML
Key Data Points
Still, investors will have to contend with an unusual stock split history. The company has not carried out a forward stock split since 2000, though ASML has initiated reverse stock splits since that time. The first was an 8-for-9 reverse split in 2007, followed by a 77-for-100 reverse split in 2012.
The company made these moves to return cash to shareholders without diluting them. In 2007, 960 million euros ($1.1 billion) was distributed to shareholders, and they received 9.18 euros ($10.69) per share in the 2012 split.
Given the high nominal price of ASML stock, such a move is unlikely today. Still, ASML has not given any public indication that it plans a stock split.
Instead, a split is likely because it would allow it to follow in the footsteps of industry peers. The current share price is well above the nominal price reached when Nvidia split its shares in 2024 and is close to Broadcom's pre-split price at the same time, increasing the likelihood of such a move.
Additionally, even though stock splits do not directly change the value of one's holdings, a lower share price offers some advantages. It allows more small investors to buy whole shares. Also, it is easier to write a covered call on ASML without spending more than $160,000 to buy 100 shares, which could increase interest in the stock.
Assessing the possibility of an ASML stock split
Given its share price and industry trends, investors should expect an ASML stock split this year.
Although the company has not announced a split, the semiconductor stock trades at levels near or above the pre-split prices of key industry peers.
Moreover, a lower share price could increase interest among small investors and make actions such as writing covered calls easier. Finally, given the level of interest in AI stocks, the lower share price could help prepare investors for more growth in ASML stock, even among those who have supposedly "never heard of it."
