Nvidia Stock Split Might Not Lead To Sustained Rally, But It Could Replace Intel In Dow Index

Nvidia Corp’s NVDA recent 10-for-1 stock split has prompted Goldman Sachs to caution investors about expecting a sustained rally.

Despite Nvidia’s shares surging nearly 27% in May and another 10% this month, reaching a market cap of $3 trillion, Goldman Sachs emphasizes that stock splits generally offer limited long-term benefits.

Goldman Sachs reviewed 45 Russell 1000 stock splits since 2019, finding a typical 4% rise in shares the week after the announcement but no apparent impact around the effective date.

Also Read: Why Is AMD Stock Trading Lower On Monday?

David Kostin, head of U.S. equity strategy at Goldman, noted that liquidity showed little change post-split.

Additionally, stock splits have not significantly boosted retail trading activity.

However, Nvidia’s previous split in 2021 and Amazon.Com Inc’s AMZN 2022 split were exceptions, showing increased retail trading.

Ben Laidler, global markets strategist at eToro, suggests the split could position Nvidia for inclusion in the Dow, potentially replacing Intel Corp INTC.

Dennis Dick, market structure analyst at Triple D Trading, anticipates some buyer exhaustion post-split, noting a typical “hangover effect” after such runs.

Nvidia’s valuation has surged 153% year-to-date, driven by an AI frenzy backed by U.S. Big Techs, including Microsoft Corp MSFT, Meta Platforms Inc META, and Alphabet Inc GOOG GOOGL.

Nvidia, Microsoft, Meta, Alphabet, and Amazon together account for about 60% of the S&P 500’s 12% return this year, with Nvidia contributing a third of this gain.

Price Action: NVDA shares were trading lower by 0.85% at $120.75 at the last check on Tuesday.

Also Read: Arm Is A Top Secular Pick Along With Nvidia: Analyst

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo via Shutterstock