A Comprehensive Analysis of NVIDIA's Stock Split: Plan, Impact, and Investment Guide

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NVIDIA completed its highly anticipated 10-for-1 stock split on June 10, 2024, adjusting its share price from approximately $1,200 to around $120. This move increased the number of shares held by investors tenfold while reducing the per-share price to one-tenth, though the total value of their investment portfolios remained unchanged at the moment of the split. The market responded positively, with the stock price rising 33% from the announcement on May 22 to the effective date.

This operation coincided with a retail investing boom. Data shows that the participation rate of young Generation Z investors in the market far exceeds that of previous generations, indicating a trend of earlier involvement in capital markets.

Key Takeaways

• NVIDIA stock split 1-for-10, lowering the per-share price, but the company’s total market capitalization and the total asset value of investors remain unchanged.
• Stock splits can lower the investment threshold, increase stock liquidity, and convey management’s confidence in the company’s future growth.
• Historical data shows that strong companies often see stock price increases after splits, but the company’s fundamentals and market environment are the key to long-term value.
• Investors should focus on NVIDIA’s leadership in AI, innovation capabilities, and market prospects, rather than just short-term stock price fluctuations.
• Splits do not change investment risk; investors should make decisions based on the company’s core value and long-term perspective.

NVIDIA Stock Split: Key Information Review

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To better understand this NVIDIA stock split event, we need to review some basic concepts and key information.

What is a Stock Split

A stock split (Stock Split) is a corporate action aimed at increasing the number of outstanding shares while proportionally reducing the price per share. This action does not change the company’s total market capitalization nor affect the total value of assets held by investors.

A vivid analogy is slicing a pizza. Suppose all the shares of a company represent one whole pizza, and each share is a slice of pizza. A stock split is like cutting each slice of pizza into more, smaller pieces. For example, in a 10-for-1 split, the one slice you originally held is cut into 10 smaller slices. Although the number of “slices” you own increases, the total amount of pizza (i.e., the total value of your investment) remains the same.

Key Dates for This Split

NVIDIA announced the split plan in its Q1 2024 earnings report. The entire process followed a clear timeline, with key milestones as follows:

• Announcement Date (May 22): The company formally announced the split plan.
• Record Date (June 6): Shareholders who still held NVIDIA stock after the close on this date were eligible to receive the post-split new shares.
• Effective Date (June 7): After the close on this day, additional shares were allocated to shareholder accounts.
• Trading Start Date with Split Adjustment (June 10): The stock began trading on the market at the new split-adjusted price.

Motivations Behind the Split

Companies typically undertake stock splits for several strategic considerations, and this NVIDIA split was no exception:

Lowering the Investment Threshold: A pre-split price exceeding $1,200 posed psychological and financial barriers for many retail investors. Reducing the price to around $120 makes it easier for more individual investors to purchase whole shares, thereby expanding the shareholder base.

Improving Stock Liquidity: In theory, lower prices and more shares can promote trading activity. However, Cboe’s analysis indicates that nominal trading value may decline after a split. For example, Apple saw a 9% drop in average daily nominal trading value after its split. Nevertheless, a study on the Chinese market suggests that increasing the supply of tradable shares does indeed enhance liquidity and improve the company’s investment efficiency.

Conveying Management Confidence: Splits are often interpreted by the market as a positive signal that management is confident in the company’s future growth. This implies that management expects the stock price to continue rising, maintaining strong momentum even after the split.

Preparation for Dow Jones Inclusion: A lower share price makes NVIDIA a strong candidate for inclusion in the Dow Jones Industrial Average (a price-weighted index), which could further enhance its market status.

Post-Split Impact: How Much Will the Stock Price Rise or Fall?

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A stock split itself does not create value, but market sentiment and historical precedents often lead investors to speculate on the future direction of the stock price. So, after the split is completed, will the stock price rise or fall? We can analyze this from three dimensions: historical data, potential positive catalysts, and fundamental value.

What Historical Data Says

Historical data shows that strong companies typically perform well after splits. The split action itself is often seen as a signal of management’s confidence in the future.

According to Bank of America’s research, since 1980, companies that conducted stock splits achieved an average total return of 25.4% in the following 12 months. This performance significantly outperformed the S&P 500’s average return of 9.1% over the same period.

The history of tech giants also provides some references. NVIDIA itself saw its stock price continue to rise in the months following its 4-for-1 split in 2021. Other companies had varying performances:

These data indicate that while an increase after a split is a high-probability event, it is not absolute. The company’s fundamentals and macroeconomic environment play a more important role.

Potential Catalysts for Increase

In addition to the positive expectations from historical trends, this NVIDIA split is accompanied by several specific upward catalysts:

• Expectation of Retail Fund Inflows: The post-split price of around $120 per share significantly lowers the purchase threshold for individual investors. Data shows that since the split announcement, retail investor buying activity and trading volume have increased substantially. This enhanced liquidity and broader shareholder base may provide ongoing support for the stock price.
• Likelihood of Inclusion in the Dow Jones Industrial Average: Market analysts generally believe that the lower share price makes NVIDIA a strong candidate for inclusion in the Dow Jones Industrial Average (DJIA), potentially even replacing Intel in the index. If successful, this would force numerous passive funds tracking the index to buy NVIDIA stock, bringing in substantial fund inflows. Analysts view this as an important positive catalyst.

Split Does Not Guarantee Increase

Investors must clearly recognize that a stock split is a financial operation that does not change the company’s core value. Short-term price increases may include market sentiment and speculative components, but long-term trends ultimately depend on the company’s fundamentals.

Google’s 2022 split is a typical counterexample. Despite completing a 20-for-1 split, its stock price fell sharply in the following year due to weakness in the advertising market and macroeconomic pressures. This powerfully illustrates that a split cannot withstand the impact of deteriorating fundamentals or industry headwinds.

Therefore, investors’ focus should return to NVIDIA’s business itself. The company’s latest earnings report shows:

• Total revenue reached $46.7 billion, up 56% year-over-year.
• Core data center business revenue reached $41.1 billion, up 56% year-over-year.
• Next-generation Blackwell platform products have begun contributing revenue.

These strong financial data are the cornerstone supporting NVIDIA’s high valuation. After the short-term excitement from the split fades, the market will ultimately reprice based on its leadership in AI, profitability, and future growth prospects.

Investor Guide: How to Make Decisions Now?

The NVIDIA stock split has been completed, and the stock price has entered a new range. For investors, this is a critical moment to re-examine investment strategies. Whether for current shareholders or potential buyers on the sidelines, rational decisions need to be made based on facts and a long-term perspective.

In line with this analysis-driven context, consider using BiyaPay as a neutral information layer before adjusting positions. Start with the NVDA symbol page to review real-time quotes and baseline metrics, then broaden your view via Stock Information to screen peers by industry and market cap, rather than reacting to short-term moves. If you’re new and want to save a custom watchlist or set alerts, begin at the registration page.

Treat these tools as inputs to the fundamental framework discussed in this article—profit quality, roadmap, and competitive dynamics—so decisions stay anchored to long-term value rather than the optics of a post-split price.

Advice for Current Shareholders

For investors already holding NVIDIA stock, the most important point is to stay calm. The stock split itself does not change the company’s fundamentals or the total value of the investment.

Tax Implications to Note: In the United States, stock splits are generally not a taxable event. It is considered a restructuring of the stock structure rather than a profit distribution. After the split, the total cost basis of the investment remains unchanged. For example, an investor who originally held 100 shares with a total cost of $8,000 will own 200 shares after a 2-for-1 split, but the total cost basis remains $8,000. According to IRS regulations, the new per-share cost basis is calculated by dividing the old total cost basis by the new number of shares. This new cost is only used when calculating capital gains upon future sale of the stock.

Investors also need to be wary of common psychological biases. One is the “52-week high anchoring bias”, where people tend to use the pre-split high price (such as $1,200) as a reference point. This bias may lead investors to sell too early when the price rises or feel unnecessary panic when the price pulls back. The correct approach is to forget the old price and evaluate the stock based on the company’s current value and future growth potential.

Considerations for Potential Investors

For investors considering entering now, the lower share price undoubtedly provides greater flexibility. However, the pros and cons need to be weighed before entry.

• Reasons to Buy
  • Investment Flexibility: A lower share price allows investors to purchase whole shares with less capital and makes it easier to add or reduce positions in small increments.
  • Continued Growth Momentum: The company is launching the more powerful Blackwell architecture chips, expected to bring new revenue growth. Its commitment to releasing a new generation of products annually helps consolidate its competitive advantage.
• Reasons to Remain Cautious
  • Historical Performance Reference: Historical data shows that NVIDIA’s stock performed flatly in the short term after its previous splits. Investors may need to prepare for returns below expectations over several months.
  • Valuation Concerns: NVIDIA’s price-to-earnings ratio (P/E) is about 42.5, higher than the market average. However, due to its astonishing expected earnings growth, its forward P/E drops to about 27.8, roughly in line with the S&P 500. This indicates that the market has already priced in its future high growth.

Currently, Wall Street analysts are generally positive on NVIDIA, but investment decisions should not rely solely on this.

Focus on Long-Term Core Value

Regardless of short-term stock price fluctuations, NVIDIA’s long-term value ultimately depends on its core competitiveness in AI, continuous innovation capabilities, and broad market prospects.

1. Macro Market Tailwinds

The AI and data center markets are in an explosive growth phase. Industry forecasts indicate that global data center energy demand will double in the next five years. Tech giants plan to invest trillions of dollars in AI infrastructure over the coming years. As the leader in the data center GPU market, NVIDIA holds about 25% market share and will directly benefit from this historic opportunity.

2. Clear Technology Roadmap

NVIDIA’s future growth is supported by a clear product roadmap.

Company CEO Jensen Huang is very optimistic about the future development of AI models, believing that future inference models will consume over 100 times more computing power, which will continue to drive demand for NVIDIA chips.

Models like OpenAI, Grok 3, and DeepSeek-R1 are inference models that apply inference time scaling. Inference models can consume over 100 times more computation. Future inference models can consume even more computation. DeepSeek-R1 has ignited global enthusiasm. This is an outstanding innovation. But more importantly, it has open-sourced a world-class inference AI model.

3. Risks and Challenges That Cannot Be Ignored

High return expectations always come with high risks. Investors must face the challenges NVIDIA encounters.

In summary, the decision to invest in NVIDIA should be based on a deep understanding of its business model, competitive landscape, and future growth drivers. The split makes the stock more accessible but does not reduce the risk of the investment itself.

The NVIDIA stock split is a completed financial operation, and its short-term market stimulation effect has been partially realized. Historical data indicates that a post-split price increase is not inevitable, and the cases of Tesla and Amazon serve as reminders. Investors must recognize that a lower share price does not mean lower investment risk.

Ultimately, investment decisions should return to fundamentals. Investors should focus on NVIDIA’s competitive barriers in AI, its clear product roadmap (such as the Rubin platform), and its growth potential in the future multi-trillion-dollar AI infrastructure market, rather than overinterpreting changes in the stock price itself.

FAQ

Does the split change NVIDIA’s total market capitalization?

No. A stock split does not change the company’s total market capitalization. It only increases the number of outstanding shares while proportionally reducing the price per share. The total value of investors’ holdings remains unchanged at the moment of the split.

Is a stock split a taxable event?

In the United States, stock splits are generally not considered taxable events. Investors do not need to pay capital gains tax immediately. The new per-share cost basis will be used to calculate gains or losses when the stock is sold in the future.

What impact does the split have on option contracts?

Option contracts are adjusted accordingly. For a 10-for-1 split, an original 1 contract typically becomes 10 new contracts. At the same time, the exercise price of the contract is adjusted to one-tenth of the original to ensure the total value of the contract remains stable.

Does a lower stock price mean lower risk?

No. A lower stock price does not equate to lower investment risk. The company’s fundamentals and business risks are not changed by the split. Investors should focus on the company’s value rather than the nominal stock price.