Nvidia might be the hottest stock in the US right now after the California-based chipmaker became only the third company in America’s history to close with a market cap over $2 trillion earlier this year, Bloomberg reported.
Momentum has only grown for the company as their $26 billion in first-quarter revenue blew away Wall Street’s expectations. At the time of this writing, Nvidia’s stock price is over $1,000 per share.
What does the Nvidia stock split mean?
Nvidia announced a 10-for-1 stock split that will take effect on June 7, 20204, per Fox Business. A stock split happens when a company increases their outstanding shares to lower the price to attract even more investors while lining the pockets of their current ones.
So for every share a current Nvidia investor has now will turn into 10 post-split. In turn, they will have more shares, but their total value will remain the same. The increase of shares lowers the price which attracts more investors, and in turn, boosting the value of shares of current investors.
How is Nvidia involved in AI?
If you’re how Nvidia’s stock price has jumped over 90% in a year, it is because the company is dominating the AI chip market. The AI boom may be the sole reason for Nvidia becoming the stock market’s new darling, founder and CEO Jensen-Huang sees artificial intelligence as the next big commodity.
“The next industrial revolution has begun — companies and countries are partnering with Nvidia to shift the trillion-dollar traditional data centers to accelerated computing and build a new type of data center — AI factories — to produce a new commodity: artificial intelligence,” he said, per Fox Business.
