Nvidia Stock Split on June 7: What to Expect?

Nvidia(NVDA), a leading player in the semiconductor and AI industries, is set to undergo a stock split on June 7. This event has garnered significant attention from investors and market analysts alike. Stock splits can often signal a company’s confidence in its future growth and are aimed at making shares more accessible to a broader range of investors. This article will explore the implications of Nvidia's stock split, what investors can expect, and how it might impact the market.

Nvidia Stock Split: Exciting Times for Nvidia & Investors

Since the announcement that Nvidia will split its stock on June 7, the stock has risen more than 3,000% over the past five years, recently surging past $1,000.

This impressive stock performance is attributed to Nvidia's dominance in the artificial intelligence (AI) chip market. The tech giant sells graphics processing units (GPUs) that power some of the most critical AI tasks, such as training and inferencing, as well as a wide variety of other AI products and services. This has driven Nvidia's revenue to record levels quarter after quarter.

So, why are investors so excited about the Nvidia stock split? The split involves offering additional shares to current holders, thereby lowering the price of each individual share and making it more affordable for a broader range of investors. Let's take an in-depth look at what to expect from the upcoming stock split and Nvidia's future prospects.

What to Expect from Nvidia Stock Split?

Lower Trading Price

First, as mentioned, a stock split lowers the price of each share. But this sort of operation doesn't change the overall market value of the company or of your holding if you already own the stock. So it's simply a mechanical operation, and that's why a stock split in and of itself isn't a reason to buy or sell a particular stock.

Stock splits aren't known to help or hurt stock performance in the days following the operation. But they represent good long-term moves for companies in the situation of Nvidia: growth players with strong prospects that have seen their shares soar to extraordinarily high levels.

For example, the price level of $1,000 may make it difficult for some investors to buy the stock unless they have access to fractional shares -- and certain brokerages don't offer these. So, by splitting its stock, Nvidia makes it easier right away and in the months (and possibly even years) to come for a greater number of investors to buy the shares.

Now, let's talk about the operation itself. Nvidia is doing a forward stock split, which is the most common sort of split. This involves offering more shares to current holders.

Nvidia's 10-for-1 split means that if you hold one Nvidia share, you'll receive an extra nine as part of the operation. In order to get the extra shares, you must be an Nvidia shareholder on the record date, which is June 6. (That said, if you buy or sell the shares the next day, the right for new shares transfers to the new owner.)

Nvidia will distribute the new shares at the end of the next trading day, which is Friday, June 7. And the stock will begin trading at the split-adjusted price on June 10. Considering today's share price of $1,095, the price on June 10 should be around $109.

Effortless Investing for Investors

If you're an Nvidia shareholder, you don't need to do anything before, during, or after the stock split. You'll automatically end up with a greater number of shares once the split is complete. If you're planning to buy Nvidia stock this week, you can proceed as usual and you will also receive the additional shares. The stock split doesn't require any special action — you can buy or sell Nvidia just as you would at any other time before or during this operation.

Starting Monday, Nvidia stock will trade at a lower price per share, but don't expect the stock to surge solely because of the split. As mentioned, stock splits aren't typically catalysts for immediate stock performance. However, Nvidia could continue to gain in the coming weeks and months due to its earnings performance and the high demand for its chips and related products. The company is set to release the Blackwell architecture and related chips later this year, which could be game-changing innovations, keeping investor interest high.

In summary, this is indeed an exciting time for Nvidia and its shareholders. Although the stock split itself won't impact share performance directly, it is a strategic long-term move. In the short term, the stock split will certainly keep investors' attention focused on Nvidia.

Should I Buy Nvidia Now?

Given Nvidia's recent performance, market leadership, and the historical positive impact of stock splits, it could be considered a buy before the stock split. However, investors should conduct thorough research and consider their investment strategy and risk tolerance.