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Nvidia Stock to Split 10-for-1, Making Shares More Accessible

The past year has witnessed a surge in interest surrounding artificial intelligence (AI). This technological revolution has propelled companies at the forefront of AI development to new heights, with chipmaker Nvidia being a prime example. Nvidia’s graphics processing units (GPUs) have become the go-to hardware for powering AI applications, and the company’s exceptional execution and financial performance have fueled its remarkable growth.

Since the beginning of 2023, Nvidia stock has skyrocketed by 540%, driven by a triple-digit increase in both revenue and profits. This surge is a direct consequence of the exploding demand for AI technology across various industries. However, this impressive performance is just a single chapter in Nvidia’s long-term growth story. Since its initial public offering (IPO) in 1999, the stock price, adjusted for splits, has transformed from a mere $0.25 to a staggering $939 per share. This translates to a mind-blowing gain of 375,500%.

On the heels of its latest stellar quarterly results, Nvidia announced a noteworthy development for investors: a stock split, the first since July 2020. This decision comes after the stock price surged by over 800% in the preceding four years. The announcement has ignited fresh interest in this already popular stock, prompting many to wonder how a stock split works and what it means for them.

A stock split simply involves dividing a company’s existing shares into a larger number of shares. In Nvidia’s case, the board of directors approved a 10-for-1 forward stock split. This means the company will amend its charter to increase the total number of authorized shares. The impact for investors? Shareholders on record as of June 6, 2024, will receive nine additional shares for every one share they own. These additional shares will be distributed after the market closes on June 7, and trading will commence on a split-adjusted basis on June 10.

There’s no need for investors to take any action. Brokerage firms will automatically handle the split in the background. Essentially, you’ll see the additional shares appear in your account on or shortly after the split date. The exact timing can vary between brokerages, so a slight delay (hours or even days) is possible before the new shares are reflected.

To illustrate the mechanics of the split, let’s consider an investor who currently owns one share of Nvidia stock, trading at around $950. After the split, this investor will hold 10 shares, each with a price of approximately $95.

A stock split itself doesn’t change the underlying value of the company or the investor’s ownership stake. It simply increases the number of shares outstanding while proportionally decreasing the price per share. However, stock splits can generate increased investor interest in a company’s stock due to the lower share price, potentially leading to higher trading volume and liquidity.

While the immediate financial impact of the split is neutral, Nvidia’s long-term prospects remain firmly tied to the continued growth of the AI market. As AI adoption accelerates across various sectors, Nvidia stands to benefit significantly, potentially propelling its stock price even higher in the years to come.