Nvidia (NASDAQ: NVDA) has soared over the past few years, and the stock added to gains in recent times when it announced something a lot of investors had 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 broader range of investors to buy. These operations involve the issuance of more shares to current holders to make that happen.
Prior to the operation, Nvidia surged to more than $1,000 a share — a level that may be a psychological barrier for some investors and a difficult buy for those aiming to take a small position. Now, with Nvidia shares trading around $120, these problems have disappeared. So, though stock splits aren’t catalysts for share performance, they can represent a positive move for a company.
But Nvidia’s big moves this year aren’t over. In fact, Nvidia has something major planned for the second half. My prediction is this move from the artificial intelligence (AI) chip giant will be much bigger than the stock split — and offer you a great reason to buy the stock. Let’s check out what’s ahead.
Nvidia’s lower per-share price
Of course, gaining access to Nvidia for a lower per-share price, thanks to the stock split, is exciting, but it’s important to remember that splits don’t change a company’s valuation: Nvidia isn’t any cheaper today than it was prior to the split. In fact, a stock split doesn’t change anything fundamental.
This upcoming move, however, will. First, a bit of background. Nvidia already is the world’s AI chip leader, with its graphics processing units (GPUs) holding 80% share of the market. This is because Nvidia’s GPUs are the fastest around, powering critical AI tasks like training and inferencing — the processes that help large language models do their job of solving complex tasks.
Nvidia also sells a variety of related AI products and services that make it the go-to destination for those launching an AI project. All of this has helped the company increase revenue and net income in the triple digits quarter after quarter.
Now, moving along to my prediction: Nvidia’s upcoming launch of its Blackwell architecture and best chip yet is much bigger news for the company and could represent a significant catalyst for the stock in the near term as well as over time as this platform adds to revenue.
Blackwell could be a game changer because it represents a whole new way of powering AI, achieving incredible performance at a cost and energy consumption that’s as much as 25 times lower than Hopper, the previous system. This is a critical feature because this savings reduces an AI customer’s overall costs, potentially making the Nvidia system the most economical choice over time.
Blackwell’s game-changing innovations
Blackwell includes six transformative innovations, including the world’s most powerful chip; the next generation Nvidia NVLink to offer high-speed communication among as many as 576 GPUs; a system of preventative maintenance to maximize system function; and more. And the Blackwell GPU offers as much as four-times-faster training and 30-times-faster inference than Nvidia’s current leading chip, the H100.
And now the really good news is this: Nvidia CEO Jensen Huang says demand for Blackwell has surpassed supply, and he expects this to continue into next year. The launch strategy, making Blackwell available in more than 100 original equipment manufacturer and original design manufacturer systems, could ensure 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.
The Blackwell launch also may reassure investors who worry about rivals taking market share from the chip giant because it should set Nvidia significantly ahead.
So, even though Nvidia made headlines for its stock split in recent times, the upcoming launch of Blackwell is much bigger news — and news that could help this already top-performing AI stock continue its gains in the second half and beyond. And that makes Nvidia a great buy now, even after its 150% increase 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 has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
Prediction: This Move From Nvidia in the Second Half Will Be Much Bigger Than the Stock Split was originally published by The Motley Fool
Source: finance.yahoo.com