NVIDIA stock split spurs trend tech industry BofA

NVIDIA's stock split may start a trend among high-value tech companies, including Microsoft and Meta Platforms, identified as potential candidates.

NVIDIA recently made headlines with its announcement of a 10-for-1 stock split, a move that could potentially set a trend among high-value tech companies, as noted by Bank of America (BofA). In a recent report, BofA identified 36 S&P 500 companies with stock prices above $500 as potential candidates for similar splits. According to Jared Woodard and his team at BofA, stocks with high share prices are often prime candidates for split announcements, as lower stock prices could make the stock more accessible to a wider range of investors.

Among the tech giants, Microsoft and Meta Platforms, both part of the "Magnificent Seven," are nearing the $500 share price threshold, making them potential candidates for stock splits, according to BofA. Other tech companies like Broadcom, Super Micro Computer, ServiceNow, and Netflix were also highlighted as potential split candidates due to their high share prices. Booking Holdings, with a single share costing over $3,500, was also mentioned as a top contender for a split.

BofA's list of potential split candidates extends beyond the tech sector, including companies like AutoZone, Regeneron Pharmaceuticals, and Eli Lilly & Co. These companies, with substantial share prices, are also seen as prime candidates for stock splits. Chipotle Mexican Grill Inc. made headlines earlier this year with its historic 50-to-1 split, indicating that the trend is not limited to tech companies alone.

The impact of stock splits is often more psychological than fundamental, as the overall value of an investor's stake remains the same despite the increase in the number of shares they own. For example, in the case of NVIDIA, one share currently valued at around $1,000 would be split into 10 shares, each worth approximately $100. While high share prices do not necessarily indicate high valuations, lower prices could make stocks appear more appealing to retail investors.