Nvidia’s stock is expected to start trading at a significantly lower price on Monday following the stock split. However, Wall Street analysts anticipate the chipmaker’s overall valuation will continue to rise.
Nvidia’s stock declined 0.1% to $1208.88 on Friday. Nvidia’s 10-for-1 stock split took effect after the closing bell, and shares will trade at the lower post-split price on Monday morning, with holders receiving nine more shares.
Nvidia shares have climbed 144% year to date, as of Friday’s close. This compares to a 12% increase in the S&P 500 index and a 14% increase in the Nasdaq Composite Index during the same time period.
Read Related – Nvidia became the world’s 2nd most valuable company
The company’s announcement of new artificial intelligence chips for the next two years, as well as agreements from large clients such as Elon Musk’s Tesla to buy Nvidia’s current generation of hardware have helped keep the rally going in recent weeks.
This week, Nvidia’s market value surpassed $3 trillion, passing Apple.
“We believe it is not out of the question that Nvidia will eventually become a 15% weight in the S&P 500,” wrote Evercore analyst Mark Lipacis in a research note.
At the current cumulative value of the S&P 500 of more than $44 trillion, that would imply Nvidia’s market cap rising to more than $6.6 trillion.
The Evercore analysts’ view is based on an observation that the dominant company in each era of computing has become an increasingly larger part of the S&P 500. Apple for example comprised 4% of the index in 2015 as smartphones became dominant, while Microsoft is now 7% based on its position in servers and data centers.
“Nvidia for its part is now [a] similar weighting as Apple but we are only 5-to-8-yrs into a 15-to-20 year transition,” Lipacis wrote.
Source
Barrons
