Over the past 30 years, Wall Street has had no shortage of the next big trends to entice investors. At the moment, nothing captures the attention of professional and everyday investors more than artificial intelligence (AI).
AI is the use of software or systems to supervise tasks normally supervised by humans, and it has applications in nearly every field and industry. This is likely why the PwC analyst believes that by his AI he could increase global gross domestic product by $15.7 trillion by 2030.
Nvidia is the backbone of the infrastructure of the AI revolution
Megacap in the past year Nvidia (NASDAQ:NVDA) It has been a leader among artificial intelligence stocks. It has become the backbone of the AI movement’s infrastructure. The company’s A100 and H100 graphics processing units (GPUs) are the brains of high-computing data centers that enable instant decision-making by AI software and systems.
Since the start of 2023, NVIDIA’s stock price has increased nearly fivefold, and the company’s market cap is on track to increase by $1.5 trillion. This is all thanks to AI. Enterprise demand for the company’s AI-fast chips is particularly high, and with supply still in short supply, Nvidia enjoys very strong pricing power, which is driving most of the sales growth.
But with Nvidia stock closing last week at $726, the prospect of a stock split may start to look increasingly attractive.
A “stock split” is an event that allows a listed company to change both its stock price and number of outstanding shares without affecting its market capitalization or business results. This can either make a company’s shares nominally more affordable for retail investors, as in a forward stock split, or it can be done to ensure a company’s continued listing on a major exchange, as in a reverse stock split. Think of it as a purely cosmetic change that can drive up the stock price. -Stock split. Nvidia is considering a forward split for the second time in the past three years.
However, Nvidia isn’t the only fast-growing AI or AI-related stock that could potentially undergo a stock split. Here are three AI companies that could thoroughly beat the GPU giant and become Wall Street’s next stock split.
meta platform
The first artificial intelligence stock to beat Nvidia and potentially become Wall Street’s next stock split is none other than the social media giant. meta platform (NASDAQ:Meta). Meta has never split its stock, but its stock price rose to nearly $490 last week.
Meta uses AI in different ways across different products. In addition to assisting with searches and weeding out violative posts made on social media platforms, we rely heavily on generative AI to help businesses tailor ads to users.
Many of the investments Meta is making in AI and virtual/augmented reality probably won’t translate into significant sales growth for many years. Meanwhile, the company continues to derive nearly 98% of its revenue from advertising. The company’s social media assets, including Facebook, Instagram, WhatsApp, Facebook Messenger, and Threads, are among the world’s top, with total monthly active users reaching nearly 4 billion in the quarter ending December. Meta should have no problem exercising its extraordinary advertising pricing powers frequently.
Another thing to note about the Meta Platform is that it is a cash flow machine. The company generated more than $71 billion in net cash from operations last year and ended 2023 with more than $61 billion in cash, cash equivalents and marketable securities. This treasure chest has given CEO Mark Zuckerberg the luxury of taking risks, such as developing Meta’s own AI chip.
super microcomputer
Server and storage solutions specialist is second AI-powered company to become Wall Street’s next stock split ahead of Nvidia super microcomputer (NASDAQ:SMCI). Like Meta Platforms, Super Micro has never split its stock. However, the company’s stock price briefly exceeded $1,000 per share last week, and a split is likely in the future.
Super Micro Computer’s sales have more than doubled this year due to growing demand for highly customizable, energy-efficient rack-scale servers. This also reflects the company’s reliance on Nvidia’s AI-powered GPUs in its products. Companies looking to leverage AI to expand their long-term growth potential and reach are increasingly turning to Super Micro.
What remains to be seen is whether the supermicrocomputer can sustain the near-exponential gains it has made over the past few weeks. Last week, the stock was up 183% year-to-date and 878% so far in 2023. Historically, every next big investment in the past 30 years has experienced an initial bubble. This means that investors have a terrible habit of overestimating the introduction of new technologies and innovations. AI will probably share this fate.
Another challenge for Super Micro is whether it can maximize demand for rack-scale solutions in AI-powered data centers. Super Micro relies on his Nvidia GPUs, so he’s at the mercy of his suppliers. But if Supermicro somehow manages to meet or exceed Wall Street’s already high growth expectations, a stock split could very well be considered.
broadcom
Semiconductor giant is the third artificial intelligence stock that could leapfrog Nvidia to become one of Wall Street’s next stock splits broadcom (NASDAQ:AVGO). Broadcom had completed his three splits until Avago acquired Broadcom in his 2016 year and kept the name. However, Avago never split its stock. As of February 16th, each Broadcom share was worth a whopping $1,245 to shareholders.
Broadcom is working to deploy AI in several ways. The company added his AI capabilities to his Trident networking processor, and in April 2023 he introduced the Jericho3-AI chip for AI networks. Jericho3 is designed to connect up to 32,000 GPUs, making it essential for high-performance data centers. That means it’s designed to handle increasingly faster workloads in enterprise data centers.
One factor that definitely works in Broadcom’s favor is its deep backlog. CEO Hock Tan could not provide an update on Broadcom’s order backlog for fiscal 2023 (the company’s fiscal year ends in late September), but the company’s order backlog is at an all-time high as of mid-2022. It reached $31 billion. Wall Street and investors typically like large backlogs because they lead to highly predictable operating cash flows.
But investors should keep in mind that Broadcom derives a significant portion of its revenue from wireless chips and accessories used in smartphones. Although this division should continue to provide modest growth and strong cash flow for Broadcom, its large role in net sales could ultimately limit the company’s overall growth rate. There is sex.
Broadcom, which has one of the highest nominal stock prices on Wall Street, is a natural candidate for a stock split.
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Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. Sean Williams has a meta role on his platform. The Motley Fool has a position in and recommends MetaPlatform and Nvidia. The Motley Fool recommends Broadcom and Super Micro Computer. The Motley Fool has a disclosure policy.
Forget Nvidia: These 3 Artificial Intelligence (AI) Stocks Could Be the Next Stock Split Stocks.
