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This will be Nvidia’s next big announcement
Nvidia (NASDAQ: NVDA) is never short of big news. More recently, the company impressed investors with details of its new Blackwell architecture and said it will launch later this year. And before that, Nvidia said it intended to start shipping its H200 graphics processing unit (GPU) – which doubles the performance of its current chip – in the second quarter of the year.
All of this, along with rising profits, have helped the stock soar, rising more than 200% in the last year. Now, a few days before Nvidia’s quarterly earnings report, it’s logical to think about the company’s next big announcement. And my prediction is that this time, it might not have to do with a future product. Instead, it could be a move that directly impacts Nvidia’s share price…
Image source: Getty Images.
Nvidia shares approach $1,000
So, as mentioned, Nvidia’s share price has risen in recent years and today has reached more than $940. Some analysts even see an increase of much more than $1,000 in the next 12 months. It seems very possible considering Nvidia’s earnings in recent quarters. This leader in the artificial intelligence (AI) chip market has reported triple-digit and even quadruple-digit earnings, and growth isn’t expected to slow down anytime soon.
That’s because we’re in the early days of AI’s history, so demand is far from peaking. For example, the percentage of companies mentioning AI in their earnings calls has increased significantly in recent years – but was still only around 16% last year, according to Goldman Sachs, as cited by Statista. So there is a lot of room for growth. And predictions for an AI market worth more than $1 trillion by the end of the decade further support the idea of more growth in the future.
Nvidia, in its forecast for the first quarter of fiscal 2025, said it expects to report revenue of $24 billion – representing yet another triple-digit increase in revenue year over year. And along with this and other news during Wednesday’s earnings report, the company could make a big announcement directly related to the stock price.
I predict Nvidia may launch a stock split, a move that reduces the price of each individual share without changing the company’s overall market value. Companies do this by issuing additional shares to current holders.
Stock splits themselves are not catalysts for stock performance, but they can be positive for a company over time by making it easier for small investors to get into a particular stock. The $1,000 price per share represents a psychological barrier for some investors – who automatically consider the price too high, even if the real value the valuation remains reasonable. And some investors don’t have access to fractional shares or prefer to buy full shares, pushing a $1,000 share beyond their reach.
The story continues
Nvidia Stock Split History
Now, let’s consider Nvidia’s stock split history, which shows that the company is open to such moves. Nvidia has completed five stock splits over the past two decades, and on each occasion the shares have traded well below their current level. So it seems possible that now, with shares approaching $1,000 and plenty of growth on the horizon to generate additional gains, Nvidia will consider a new stock split.
Should you wait for a possible split to buy Nvidia or get in on the stock now? The good news is that you can do this too. Nvidia is the market leader and focuses on the investment necessary to remain in its position – in addition, the company operates in one of the fastest growing areas today.
Nvidia’s prospects are bright, and that means that whether you invest in, say, a fractional share today or wait to buy multiple shares if the company completes a stock split in the near future, the result will be the same. If you hold onto your Nvidia for the long term, you’ll likely benefit as this exciting AI growth story unfolds.
So whether my prediction is correct or not, an Nvidia buy today or in the coming months, as part of a diversified portfolio, could still help you on the path to financial freedom over time.
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Adriana Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group and Nvidia. The Motley Fool has a disclosure policy.
Prediction: This will be Nvidia’s next big announcement was originally published by The Motley Fool