Bengaluru, India – After Nvidia’s 10-for-1 stock split took effect, there is speculation about the possibility of the artificial intelligence leader being included in the blue-chip Dow index. The split was designed to make the company’s shares more affordable for employees and investors, increasing outstanding shares without altering the stock’s overall value.
Global markets strategist Ben Laidler noted that Nvidia’s stock split could potentially position it for inclusion in the Dow, potentially displacing fellow chip stock Intel with the lowest weighting. Following the announcement of the share split and a strong forecast last month, the stock initially rose by nearly 27% before dipping slightly in premarket trading on Monday.
Analysts suggest that stock splits often attract individual investors with smaller capital compared to institutional investors. While some recent stock splits, like Amazon’s in 2022 and Nvidia’s in 2021, have generated increased retail trading activity, others have not seen significant changes, according to Goldman Sachs strategists.
Considering that liquid stocks with low trading costs tend to have higher valuations, investors may view Nvidia as a strong contender for the 30-member price-weighted Dow index. With the stock trading at $120 per share post-split, down from $1,200 before the split, there is potential for Nvidia to secure a spot in the prestigious index.
It is worth noting that trading volumes have seen brief upticks following stock split announcements but have not shown significant changes once the splits are implemented. While the company’s market value soared to $3 trillion, surpassing Apple to claim the second-most valuable spot globally after Microsoft, there is anticipation around Nvidia’s future performance in the market.
As discussions continue about potential index additions or deletions, investors and market analysts alike are closely monitoring Nvidia’s trajectory as it navigates the aftermath of its recent stock split. With the company’s reputation as a dominant player in the AI chip industry, all eyes are on Nvidia’s next steps.