The AI Boom and its Impact on Semiconductor Stocks

The artificial intelligence revolution has caused a growth surge for the technology’s enablers, most of which reside in the semiconductor sector. In fact, the stock movements for these companies have been so strong that many now trade at very, very high stock prices, setting these AI beneficiaries up for a potential stock split.

Understanding the Role of Stock Splits in the AI Era

Stock splits don’t create or destroy any value on their own. After all, if a company has twice as many shares but half the stock price, the company’s total market cap remains the same. However, stock splits can help certain people afford shares if they don’t have a broker that allows fractional share buying. Moreover, splits can increase a stock’s liquidity, which can help lower bid-ask spreads for trading purposes, and therefore attract larger funds to a stock. Therefore, even though the following five stocks have already had very strong runs, a split could potentially drive these AI winners to even further upside.

Examining the Top AI Chip Stocks

1. Nvidia: As the AI GPU leader, Nvidia stands at the forefront of the AI revolution. With its best-in-class AI chips and software ecosystem, Nvidia has witnessed remarkable growth, including a recent 4-for-1 stock split in July 2021. With its share price soaring to $944, speculation abounds regarding the possibility of another split, further fueling its AI-driven hypergrowth.
2. Super Micro Computer: Surpassing even Nvidia in stock market returns over the past three years, Super Micro Computer’s stock has increased a whopping 25 times. The company’s mass-customization capabilities and energy-efficient server designs have propelled it to new heights, with a share price hovering around $900, potentially signaling a split on the horizon.
3. Broadcom: Benefiting from the surge in data center networking needs and its application-specific integrated chip (ASIC) design IP, Broadcom has emerged as a key player in the AI ecosystem. With its share price rallying to over $1,400, fueled by CEO Hock Tan’s strategic acquisition strategy, Broadcom stands as a prime candidate for a stock split.

Navigating the Future of AI Investments

As the AI revolution continues to reshape industries and drive innovation, investors are closely monitoring the trajectory of AI chip stocks. With the potential for stock splits on the horizon, these companies are poised to capture even greater market share and deliver substantial returns to shareholders. As we enter this new era of AI-driven growth, staying informed and strategically positioning investments will be key to capitalizing on the opportunities presented by this transformative technology.