For the better part of two years, the bulls have been running wild on Wall Street. While these gains can prominently be traced to the rise of artificial intelligence (AI), AI isn’t the only catalyst responsible for sending the broad-market indexes to fresh highs.
The outsized gains in the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite in 2024 can also be attributed to excitement surrounding stock splits in some of Wall Street’s most-influential businesses.
A stock split is a tool publicly traded companies have in their proverbial well that they can use to cosmetically adjust their share price and outstanding share count by the same magnitude. These changes are superficial in the sense that they don’t impact a company’s market cap or underlying operations in any way.
Since this year began, more than a dozen prominent businesses have completed stock splits. Only one of these splits was of the reverse variety, which is designed to increase a company’s share price. Meanwhile, over a dozen were forward stock splits, which make shares of a publicly traded company more nominally affordable for retail investors and/or employees who aren’t able to purchase fractional shares.
Investors tend to gravitate to companies conducting forward splits for one key reason: sustained outperformance. Publicly traded companies that need to reduce their share price to make it more nominally affordable for everyday investors are almost always out-executing and out-innovating their peers. In short, they’re the type of businesses we’d expect to outperform over extended periods.
Perhaps unsurprisingly, AI stock splits were a big theme this year. Arguably the two most-prominent AI hardware players, Nvidia (NASDAQ: NVDA) and Broadcom, completed respective 10-for-1 forward splits in June and July.
However, the outlook for Wall Street’s stock-split stocks differs greatly as we steam toward the new year. Based on the forecasts of select Wall Street analysts, two AI stock-split stocks offer upside of up to 174% in 2025.
The first stock-split stock that can catapult higher in 2025, based on the forecast of one Wall Street analyst, is customizable rack server and storage solutions specialist Super Micro Computer (NASDAQ: SMCI). Super Micro completed its first-ever split (10-for-1) following the close of trading on Sept. 30.
Despite a roller-coaster year, which I’ll address in greater detail in a moment, Loop Capital’s Ananda Baruah believes Super Micro’s stock can reach $100 per share. If Baruah’s prognostication were proved accurate, it would imply 174% upside from where shares closed on Dec. 13.
