Nvidia Stock Surges After 10-for-1 Split


Nvidia (NASDAQ:NVDA) started trading on Monday after a 10-for-1 stock split, bringing the price down from its previous Friday closing of $1,208.88 to $120.88. The stock saw a slight dip of about 2% during early trading on Monday.

The split means that Nvidia common stock shareholders as of Thursday’s market close received 10 shares for every share they owned. For example, a shareholder who owned four shares of Nvidia on Thursday now holds 40 shares after the split. Stock splits are intended to make owning shares more accessible by reducing the price of individual shares without affecting the total value of existing shareholders’ holdings.

Matt Amberson of Options Research & Technology Services says the split will likely make Nvidia more appealing to retail traders. High implied volatility in options prices, especially for stocks over $1,000, has made options trading expensive. Options traders are eagerly awaiting the split.

Nvidia’s split comes after the company briefly reached a total market valuation of over $3 trillion, surpassing Apple to become the second most valuable publicly traded US company.

The surge in Nvidia’s shares can be attributed to the increased interest in generative AI, particularly since the launch of OpenAI’s ChatGPT software in late 2022. Tech giants like Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG, NASDAQ:GOOGL), and Microsoft (NASDAQ:MSFT) have been competing for Nvidia’s hardware to power their generative AI platforms.

This surge has boosted Nvidia’s revenue. In the first quarter, the company reported adjusted earnings per share of $6.12 on revenue of $26 billion, representing increases of 461% and 262%, respectively, from the same period a year ago. Nvidia’s Data Center revenue skyrocketed 427% year over year to $22.6 billion, accounting for 86% of the company’s total revenue for the quarter. Meanwhile, its gaming segment generated revenue of $2.6 billion.

Nvidia remains committed to innovation. CEO Jensen Huang announced the upcoming release of an upgraded version of its Blackwell AI platform, named Blackwell Ultra, scheduled for 2025, along with an entirely new platform called Rubin, planned for 2026. An Ultra version of the Rubin hardware is also scheduled for release in 2027.

Stock splits are often seen as a sign of strength by investors, with companies that do splits typically outperforming the S&P 500 in the year following the announcement. Since Nvidia announced the split on May 22, shares have risen approximately 27%.

As Nvidia continues to advance, competitors like AMD (NASDAQ:AMD) and Intel (NASDAQ:INTC) are stepping up their efforts. They have announced their own AI hardware and outlined future product roadmaps as alternatives to Nvidia’s offerings. Additionally, Nvidia’s customers are exploring the development of their own AI chips to train and operate AI models, potentially reducing the need to purchase Nvidia products.

Beyond hyperscalers, companies like Meta (NASDAQ:META), Tesla (NASDAQ:TSLA), and various tech and automotive firms are seeking Nvidia’s chips to power AI models for applications ranging from recommendation engines to autonomous driving software. Nvidia also sees potential growth in markets beyond tech, including government entities and research institutions, indicating a widening total addressable market.