Nvidia (NVDA) has been on a winning streak with its blowout quarterly earnings reports, but its most recent announcement of a stock split and dividend hike has investors buzzing. While these moves may seem like positive catalysts, they are not the sole reasons to invest in the tech giant.
Stock splits, like the one Nvidia is implementing, are more about making change than fundamentally altering the stock. Shareholders will receive 10 shares for every one share held, essentially breaking a $10 bill into 10 one-dollar bills. The fundamentals and technicals of the stock remain the same – only the arithmetic changes.
With nearly 70% of actively managed mutual funds already owning Nvidia, and its significant presence in various indexes, investors likely already have exposure to the company. Nvidia’s weight in popular indexes like the S&P 500 and Nasdaq-100 is substantial, making it easily accessible to investors through ETFs and mutual funds.
While Nvidia has been a market darling for its strong performance and potential in the AI space, it’s important to remember that stocks don’t always go up. Market cycles and volatility can impact even high-flying stocks like Nvidia. However, analysts remain bullish on the stock, giving it a Strong Buy rating.
In the end, while the stock split and dividend hike may be exciting news for Nvidia investors, it’s important to consider the broader market trends and the company’s fundamentals when making investment decisions. The stock split may be a nice bonus, but it’s not the main reason to buy into Nvidia at this time.
