Nvidia's Stock Split: What Analysts Are Saying and Could It Join the Dow Jones?

Nvidia's New Trading Price and Market Moves Capture Analysts' Attention

Jun 10, 2024 - 11:01
Jun 10, 2024 - 11:02
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Nvidia's Stock Split: What Analysts Are Saying and Could It Join the Dow Jones?
Nvidia's Stock Split: What Analysts Are Saying and Could It Join the Dow Jones?

Nvidia shares experienced a slight decline on Monday as the company started trading after a significant 10-for-1 stock split. This event prompted Wall Street analysts to revise their price targets for the tech giant.

Nvidia's Stock Split and New Trading Price

Nvidia (NVDA), which recently surpassed Apple as the second-largest company by market value, began trading on a split-adjusted basis on the Nasdaq at $120.38 per share. This stock split was announced last month following a strong fiscal first-quarter earnings report, which showed better-than-expected sales and a high demand outlook for Nvidia's new Blackwell processors. These processors are anticipated to power AI systems from major companies such as Meta Platforms (META), Microsoft (MSFT), and Amazon (AMZN).

In the stock split, Nvidia shareholders received nine additional shares for every one share they owned. The company stated that the purpose of this move was to "make stock ownership more accessible to employees and investors."

Wall Street Analysts Adjust Price Targets

The stock split led to several adjustments in price targets from Wall Street analysts and sparked speculation that Nvidia could soon be added to the Dow Jones Industrial Average, as its new price level is more in line with other stocks in the index.

Joseph Moore of Morgan Stanley: Morgan Stanley analyst Joseph Moore lowered his rating on Advanced Micro Devices (AMD) to equal weight from overweight and adjusted his price target for Nvidia to $116 per share (split-adjusted). He anticipates that Nvidia may need to reduce prices for its Blackwell processors and other chips to remain competitive.

"Lower Blackwell pricing, wider availability of Hopper chips, and data center power issues might become more significant for Nvidia this year and next," Moore explained. "Our research shows that Nvidia is keen on defending its market share, speeding up its development roadmap, and being more aggressive with pricing."

Christopher Rolland of Susquehanna: Susquehanna analyst Christopher Rolland increased his price target for Nvidia to $145 per share (split-adjusted). He pointed out that fears of a sales gap between the launch and delivery of new Blackwell systems have been eased by the continuous demand for Nvidia's older H100 Hopper chips.

Blayne Curtis of Barclays: Barclays analyst Blayne Curtis also raised his price target for Nvidia to $145 per share and revised his revenue forecast for the current year by $25 billion, bringing it to $157.1 billion. Curtis expects Nvidia to benefit from increased sales due to sovereign AI demand, where governments build data centers to train large language models for state functions. Curtis forecasts full-year earnings of around $3.62 per share for Nvidia.

Speculation About Dow Jones Inclusion

The adjusted share price has led to speculation that Nvidia might be added to the Dow Jones Industrial Average due to its significant market influence and position as the world's third-largest company by market value. Intel (INTC), with a market value of $130 billion and a 33% decline over the past five years, is considered a likely candidate for replacement. S&P Dow Jones Indices has made notable changes to the index before, such as replacing AT&T (T) with Apple in 2015 following Apple’s 7-for-1 stock split.

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