Chipmaker Nvidia announced a 10-for-1 stock split. A split is an increase in the number of shares outstanding by splitting each original share proportionately. During this procedure, no new shares are issued.

Nvidia background

Over the past five years, Nvidia investors have seen the company’s historic growth, with its share price rising 25-fold. The tech giant has long been known as a major maker of advanced graphics processing units (GPUs) for video games, but has recently become a central player in the hardware market during the artificial intelligence boom.

Nvidia’s sales soared last year as companies such as Google, Microsoft, Meta Platforms, Amazon and OpenAI bought billions of dollars worth of Nvidia processors – the advanced and expensive chips needed to develop and implement AI applications. The company’s largest and most important business is the sale of data centers, which include chips for deploying AI, as well as many additional components needed to run large servers.

As a result, Nvidia said its data center revenue grew 427% from the first quarter of the last fiscal year to $22.6 billion.

How will the stock split take place?

Following its earnings release on May 22, 2024, Nvidia’s stock soared 10% on Thursday, a day after the company announced a 10-for-1 stock split as part of its impressive quarterly report. Nvidia has announced a stock split plan, and following the semiconductor giant’s stunning run, the move could attract more interest from retail investors and potentially pave the way for the company’s inclusion in the Dow Jones Industrial Average.

The split will be in the form of a stock dividend with the distribution of 9 additional shares of common stock for each share held by the investor as of the close of business on June 7th. The new shares will be distributed after the market closes on June 10 and will begin trading on the exchange.

What were Nvidia’s previous stock splits?

This will be the sixth time NVIDIA has split its stock, with the first being a two-for-one split in June 2000. Another two-for-one split followed in September 2001. The third 2-for-1 split occurred five years later, in April 2006. The most recent was a four-to-one split that occurred in 2021. This time around, a 10-for-1 split is expected. The split will bring Nvidia’s share price down to around $104 as of Thursday’s price. That could make it the 21st most valuable stock in the Dow, just behind Merck and ahead of Walt Disney.

A number of US mega-cap companies have carried out stock splits in recent years:, Alphabet and Tesla. For Nvidia, the stock split could generate increased interest from retail investors. Since the beginning of 2024, the shares of the manufacturer of advanced microchips have already more than doubled in price.

Nvidia’s leadership in the AI boom has already made it the most popular stock among individual investors over the past year. The company’s stock has the largest weighting in the average physics investor’s trading portfolio at 9.3%, followed by Apple at 9.2% and the SPDR S&P 500 ETF at 7.8%, respectively.