The wait is over for one of this year’s most eagerly awaited events, and all investors, including small traders can now get their hands on this Artificial Intelligence (AI) titan Nvidia (NASDAQ:NVDA). Yes, you heard it right. NVDA completed its 10-for-1 stock split on Friday, June 7, with split-adjusted trading commencing today, June 10. The excitement around Nvidia’s stock split could increase speculative trading, contributing to bubble expectations.
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To explain further, a stock split increases the number of shares and reduces the share price, but the total market value of the company remains unchanged, leaving its valuation unaffected.
What Does This Stock Split Mean for NVDA?
Following NVDA’s 10-for-1 stock split, existing shareholders will see their number of shares multiplied by ten. For instance, if an investor held one NVDA stock before the split, they will now own ten shares post-split. Hence, NVIDIA’s stockholders will receive a higher number of shares at reduced prices without altering the overall value of their total investment.
Concurrently, NVDA’s share price will decrease proportionally due to the division of shares, maintaining the company’s market capitalization. This makes Nvidia stock more affordable for new investors, potentially attracting a wider range of participants, including retail traders.
This increased accessibility can lead to a surge in trading volume and heightened investor enthusiasm, potentially driving the stock price to higher levels. Any such rapid price increases could create concerns about the formation of a market bubble.
Though stock splits are common, the buzz surrounding Nvidia’s split could prompt speculative trading. It’s important to highlight that after the market opens today, the new price of NVDA’s shares will be revealed.
Solid Reasons to Cheer for NVDA
NVDA has been experiencing new highs, showing no signs of slowing down. Fueled by ongoing enthusiasm for artificial intelligence, the chipmaker recently surpassed the $3 trillion market cap milestone, delivered exceptional Q1 results, and offered optimistic guidance.
Nvidia’s Meteoric Rise: Just last week, Nvidia shares made headlines as they briefly overtook Apple (NASDAQ:AAPL) in market value, crossing the $3 trillion mark for the first time in its history.
NVDA stock has been making its mark with dizzying speed this year. On a year-to-date basis, the shares of this company are up around 144%, driven by AI-induced tailwinds.
Robust Earnings Performance: The AI giant reported stellar first-quarter Fiscal 2025 results, topping both earnings and revenue estimates, driven by higher demand for NVIDIA’s graphics processing units (GPUs). Earnings per share came in at $6.12, which beat analysts’ consensus estimate of $5.60 per share. In addition, sales increased by 262.2% year-over-year, with revenue hitting $26.04 billion.
Promising outlook: For the second quarter of fiscal 2025, the graphics chipmaker expects revenues to be $28 billion (+/- 2%).
What is the Target Price for NVDA?
Turning to Wall Street, analysts have a Strong Buy consensus rating on NVDA stock based on 37 Buys, three Holds, and zero Sells assigned in the past three months.
Before the commencement of the stock split today, TD Cowen’s Matt Ramsay, a 5-star analyst rated in the top 1% of the Street’s stock pros, assigned a Buy rating on the stock. (To watch Ramsay’s track record, click here.)
Overall, the average NVDA price target of $1,179.44 per share implies 2.44% downside potential. However, it’s worth noting that estimates may likely change once the stock starts trading on a split-adjusted basis today after the market opens.
