Nvidia's 10-for-1 Stock Split: Impact on Retail Investors and 7% Surge

Key Takeaway

• Nvidia announced a 10-for-1 stock split effective June 7, making shares more accessible and boosting retail investor interest.
• Following the announcement, Nvidia's stock surged over 7%, continuing its impressive year-to-date rally of 92%.
• Analysts are optimistic, with many raising price targets; VanEck Semiconductor ETF also gained 3% post-announcement.

Nvidia Announces Stock Split

Nvidia, the prominent chipmaker, announced a 10-for-1 stock split following its first-quarter fiscal 2025 earnings report on Wednesday. The split will take effect after the market close on June 7, with shares beginning to trade on a split-adjusted basis on June 10. This move is aimed at making Nvidia's stock more accessible to a broader range of investors. The company stated that the split would make ownership "more accessible to employees and investors."

The announcement came alongside quarterly earnings that exceeded Wall Street's expectations, showcasing robust guidance and ongoing momentum in artificial intelligence (AI). Nvidia's shares surged more than 7% at the opening bell, building on a 92% year-to-date rally and surpassing $1,000 for the first time on record. The stock closed on Wednesday at $949.50, and with the 10-for-1 split, each share would be priced at $94.95, though investors would need to buy 10 shares to maintain the same ownership level.

Market Reaction and Analyst Views

The stock split announcement has been met with enthusiasm from Wall Street analysts. Loop Capital's Ananda Baruah noted, "Given the degree to which retail investors pay attention to NVDA (think both Gen AI & Gaming notoriety), we believe the split actually has an opportunity to make an impact." Citi's Atif Malik described the split as a "positive surprise," while Susquehanna's Christopher Rolland said it "invigorates the retail crowd." Needham's Quinn Bolton added, "The 10:1 stock split likely adds short-term momentum to this AI bellwether."

The positive sentiment was reflected in the market, with many Wall Street firms raising their price targets for Nvidia. The VanEck Semiconductor ETF also saw a 3% lift following Nvidia's announcement. The chipmaker joins other high-profile companies that have recently implemented stock splits, such as Chipotle, which approved a 50-for-1 split in March, and Walmart, which announced a 3-for-1 division in January. Earlier this week, chip equipment maker Lam Research also said it would implement a 10-for-1 split and a share buyback totaling up to $10 billion.

Financial Performance and Guidance

Nvidia's quarterly earnings report highlighted strong performance and optimistic guidance. The company's results prompted many analysts to boost their price targets, driven by continued demand and AI momentum. Nvidia's shares have experienced a significant rally this year, reflecting investor confidence in the company's growth prospects.

While stock splits do not change the financial fundamentals of a company, they can have a psychological effect on retail investors by making shares appear more affordable. This increased accessibility can potentially drive higher trading volumes and investor interest. Nvidia's move to split its stock aligns with its strategy to make ownership more accessible and to capitalize on the growing enthusiasm for AI and gaming technologies.

Street Views

• Ananda Baruah, Loop Capital (Bullish on Nvidia):

  "Given the degree to which retail investors pay attention to NVDA (think both Gen AI & Gaming notoriety), we believe the split actually has an opportunity to make an impact."

• Atif Malik, Citi (Bullish on Nvidia):

  "The split is a positive surprise."

• Christopher Rolland, Susquehanna (Bullish on Nvidia):

  "It invigorates the retail crowd."

• Quinn Bolton, Needham (Bullish on Nvidia):

  "The 10:1 stock split likely adds short-term momentum to this AI bellwether."