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If you’ve been wanting to buy Nvidia at a cheaper price, you now have the opportunity. The tech giant conducted a 10-for-1 stock split after the market close on June 7, 2024. Nvidia’s share price is the lowest it’s been in years.
Which AI leaders could have monster stock splits on the way after Nvidia? Here are two top candidates and one definite pick.
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1. Broadcom
In one sense, Broadcom (NASDAQ: AVGO) has never split its stock. Avago acquired the “old” Broadcom in 2016 and retained its name. The “old” Broadcom had conducted three stock splits before being acquired. However, Avago had never split its shares — and neither has the “new” Broadcom.
Broadcom’s share price currently hovers around $1,600. That’s well above Nvidia’s share price when it split its stock. Although the company’s management team hasn’t hinted at a stock split so far, the timing could be right for one — perhaps a 10-for-1 split along the lines of what Nvidia did.
Broadcom’s networking products are enjoying strong demand in AI data centers. The company isn’t resting on its laurels, though. It recently announced a new portfolio of ethernet adapters specifically designed for AI infrastructure. Broadcom believes its latest product launch “revolutionizes the AI networking landscape.”
2. ASML Holding
ASML Holding (NASDAQ: ASML) has conducted five stock splits in its history. This number includes two reverse stock splits, one in September 2007 and another in November 2012.
There’s a good case that another conventional stock split is due. ASML’s share price tops $1,000 and has remained above $800 throughout most of 2024 so far. However, the company has given no indications that a stock split is in the works.
ASML stands as the only manufacturer of extreme ultraviolet (EUV) lithography machines used to make the most advanced chips. How important is this advantage? Goldman Sachs believes that chips made using EUV “will enable the next wave of AI.”
3. Lam Research
Lam Research (NASDAQ: LRCX) has had two stock splits. However, the most recent one — a 3-for-1 split — came way back in March 2000.
Unlike Broadcom and ASML, Lam definitely has a stock split on the way. Last month, the company announced a 10-for-1 stock split scheduled for after the market close on Oct. 2, 2024. This split makes a lot of sense considering Lam’s shares are trading above $1,000.
Lam is a leading provider of wafer fabrication equipment used in making semiconductors. The company’s AI edge is in storage. AI apps require fast, high-density storage. Lam’s technology enables manufacturing enterprise solid-state drives that are 50 times faster and up to five times more power efficient than hard disk drives, which currently store over 80% of enterprise data.
Are these potential stock-split candidates buys?
I wouldn’t buy any of these stocks solely because of their scheduled (for Lam Research) and possible (for Broadcom and ASML) future stock splits. Stock splits have zero effect on companies’ underlying businesses or growth prospects.
That said, I think all three of these stocks could deliver fantastic gains over the long term as AI continues to drive demand for high-powered chips and the equipment required to make these chips. Broadcom, ASML, and Lam Research should remain at the forefront of the AI chip market.
To be sure, all three of these stocks trade at premium valuations. It’s possible that they could be more volatile than most stocks. However, Broadcom, ASML, and Lam should be good picks for aggressive growth investors.
