Wall Street's Newest Artificial Intelligence (AI) Stock Split Has Arrived -- and It's Following in the Footsteps of Nvidia and Broadcom

For the better part of two years, Wall Street and the investing community have been captivated by the rise of artificial intelligence (AI). The prospect of AI-driven software and systems having the capacity to learn and evolve over time comes with eye-popping dollar signs.

But it's not just AI that's helped lead the ageless Dow Jones Industrial Average, benchmark S&P 500, and growth-powered Nasdaq Composite to multiple record-closing highs in 2024. Stock-split euphoria has also been a defining catalyst.

A stock split is a tool publicly traded companies can lean on that gives them the option of superficially adjusting their share price and outstanding share count by the same magnitude. Splits are surface scratching in the sense that they don't impact a company's market cap or its operating performance.

Since this year began, a little over a dozen prominent businesses have announced or completed a stock split, four of which are high-flying AI stocks. Although most investors have been eyeing the two leading businesses in the artificial intelligence arena, Nvidia (NASDAQ: NVDA) and Broadcom (NASDAQ: AVGO), today, Oct. 3, marks the arrival of Wall Street's newest AI stock-split stock.

Nvidia and Broadcom have monopolized Wall Street's attention in 2024 -- and with good reason

For much of the year, Nvidia and Broadcom have been the center of both the AI revolution and stock-split euphoria. Nvidia completed its largest-ever forward split, 10-for-1, following the close of trading on June 7. Meanwhile, Broadcom enacted its first-ever split, also 10-for-1, when trading ended on July 12.

There are valid reasons both companies have been the center of attention in 2024.

In the relative blink of an eye, Nvidia's graphics processing units (GPUs) became the overwhelming top choice by enterprise data centers. The analysts at TechInsights estimate that 2.67 million GPUs were shipped to data centers in 2022, along with 3.85 million in 2023. Nvidia is responsible for roughly 98% of these shipments, with the company's H100 GPU (commonly known as the "Hopper") seeing backlogged demand.

One of the great things about demand swamping supply is that it tends to have a positive impact on pricing power. Nvidia's Hopper has been commanding roughly $30,000 to $40,000 per chip, which represents a 100% to 300% premium to competing AI-GPUs. For Nvidia, it's meant a rapid increase in its gross margin.

To boot, Nvidia's CUDA software platform has done its job in keeping businesses loyal to its product and service ecosystem. CUDA is the toolkit used by developers to maximize the computing capacity of their Nvidia GPUs, as well as to build large language models.