Nvidia (NASDAQ: NVDA) has soared in recent years, and the stock has added to its gains lately by announcing something many investors have been waiting for: a stock split. The company decided to launch a 10-for-1 split to bring its shares down to a level that would make it easier for a wider range of investors to buy. These transactions involve issuing more shares to current holders to achieve this.
Before the deal, Nvidia’s stock price had reached more than $1,000, a level that can be a psychological barrier for some investors and a difficult buy for those wanting to take a small position. Today, Nvidia stock is trading around $120, those problems are gone. So while stock splits are not catalysts for stock performance, they can represent a positive development for a company.
But Nvidia’s big moves this year aren’t over. In fact, Nvidia has something big planned for the second half of the year. I predict this move from the artificial intelligence (AI) chip giant will be far bigger than the stock split — and will give you a great reason to buy the stock. Let’s see what’s in store.
Nvidia stock price drops
Of course, accessing Nvidia at a lower price per share, thanks to splitting of sharesis exciting, but it is important to remember that divisions do not change anything in a business evaluation: Nvidia is not cheaper today than it was before the split. In fact, a stock split doesn’t fundamentally change anything.
However, this upcoming decision will. First, a little contextualization. Nvidia is already the global leader in AI chips, with its graphics processing units (GPUs) holding an 80% market share. Indeed, Nvidia’s GPUs are the fastest on the market, performing critical AI tasks like training and inference – the processes that help large language models do their job of solving complex tasks.
Nvidia also markets a variety of related AI products and services that make it the destination of choice for those starting an AI project. All of this helped the company grow its revenue and net profit by triple digits quarter after quarter.
Now for my prediction: Nvidia’s upcoming launch of its Blackwell architecture and its best chip yet is much bigger news for the company and could be a significant catalyst for the stock in the near term as well as over time as that platform grows revenue.
Blackwell could be a game-changer because it represents a completely new way to power AI, achieving incredible performance at up to 25 times lower cost and power consumption than Hopper, the previous system. This is a critical feature because these savings reduce an AI client’s overall costs, potentially making the Nvidia system the more economical choice over time.
Blackwell’s Revolutionary Innovations
Blackwell includes six transformative innovations, including the world’s most powerful chip; next-generation Nvidia NVLink to deliver high-speed communication between up to 576 GPUs; a preventive maintenance system to maximize the operation of the system; and more. And the Blackwell GPU delivers up to four times faster training and 30 times faster inference than Nvidia’s current leading chip, the H100.
And now the good news is this: Nvidia CEO Jensen Huang has said that demand for Blackwell has outpaced supply and he expects that to continue next year. The launch strategy of making Blackwell available on more than 100 OEM and OEM systems could provide a strong start. All of this is reason to be optimistic about the platform’s debut and its contribution to revenue in the coming quarters.
Blackwell’s launch could also reassure investors who fear rivals could take market share from the chip giant, as it should give Nvidia a significant lead.
So while Nvidia has been in the headlines recently due to its stock split, Blackwell’s upcoming launch is much bigger news — and news that could help this already strong AI stock continue its gains in the second half of the year and beyond. And that makes Nvidia a great buy now, even after its 150% surge in the first half of the year.
Should you invest $1,000 in Nvidia right now?
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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
Prediction: This Nvidia H2 Deal Will Be Much Bigger Than The Stock Split was originally published by The Motley Fool
