Nvidia (NVDA) shares began trading Monday on a new 10-for-1 split basis, revising Friday’s closing price from $1,208.88 to $120.88. Shares fell and rose just under 1% on Monday morning.
The split means that owners of Nvidia common stock held at market close on Thursday received 10 shares for every share they held. For example, if a shareholder owned four shares of Nvidia on Thursday, they will now own 40 shares after the split.
Stock splits make stock ownership more affordable by reducing the price of individual shares without diluting the value of existing shareholders’ total holdings.
“The stock split will make Nvidia much more accessible to many of these retail traders,” Matt Amberson of Option Research & Technology Services told Yahoo Finance last Thursday. “Now, you rarely see a stock above $1,000 with 50% implied volatility, so option prices are extraordinarily high, so options traders are really looking forward to the split.”
Nvidia’s split comes after the company’s total market value briefly eclipsed $3 trillion on Wednesday, pushing the chip company past Apple to become the second most valuable publicly traded company in the US.
Nvidia shares have soared thanks to the explosion of interest in generative AI that began when OpenAI released its ChatGPT software in late 2022. Since then, hyperscalers like Amazon (AMZN), Google (GOOG, GOOGL), and Microsoft (MSFT) have been struggling. to get its hands on Nvidia hardware to power its own generative AI platforms.
This caused Nvidia’s revenue to soar. In the first quarter, Nvidia reported adjusted earnings per share of $6.12 on revenue of $26 billion, jumps of 461% and 262%, respectively, from the same period a year ago.
Nvidia’s data center revenue for the most recent quarter increased 427% year over year to $22.6 billion, representing 86% of the company’s total revenue for the quarter. Nvidia’s gaming segment, which was previously its most important business, reported revenue of $2.6 billion.
And Nvidia continues to develop new hardware to keep customers coming back. On June 3, CEO Jensen Huang announced that an updated version of its Blackwell AI platform called Blackwell Ultra will launch in 2025, as well as an entirely new platform called Rubin set for 2026. And in 2027, the company will launch an Ultra version of Rubin Hardware.
Stock splits are seen by investors as a sign of strength, and consequently, companies that split their shares typically outperform the S&P 500 in the year following their announcement.
On average, shares rise 25% in the 12 months following a split announcement, compared with an average return of 12% for the S&P 500 over the same period, according to Bank of America analysis. This has been true “across market regimes,” wrote Jared Woodard, investment and ETF strategist at BofA, in a note to clients.
Notably, the trend includes the period from 2000 to 2009, amid the unfolding of the technology bubble. Since Nvidia announced its split on May 22, shares have risen about 27%.
Nvidia’s stock split comes as AMD (AMD) and Intel (INTC) are in hot pursuit, announcing their own AI hardware and pitching their future product roadmaps as alternatives to Nvidia’s. Nvidia customers are also developing their own AI chips to train and run AI models to help mitigate the cost of purchasing new Nvidia products.
However, they are not just hyperscalers. Meta (META), Tesla (TSLA) and a host of other big tech and automotive companies are trying to acquire Nvidia’s chips to train and deploy AI models for everything from recommendation engines to autonomous driving software.
What’s more, Nvidia says it has a growing total addressable market beyond technology companies, including government organizations, research institutions and more, meaning it could have a lot more ground to cover.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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