The next trillion dollar company?
For a time, it seemed like stock splits had gone out of fashion.
Mike Sakuraba graduated with double major of English and Economics. Part time writer, part time investor, full time dad. Mike loves writing about technology, sports, and investing.
2021-05-22 12:58

With stocks like Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) continuing to grow to several thousand dollars per share, retail investors were finding it more difficult to add these names to their portfolios. Last year, we saw a huge surge leading up to stock splits from Tesla (NASDAQ:TSLA) and Apple (NASDAQ:AAPL). There is something psychological about a stock split where investors believe they are getting more slices of the same pie. Of course, we know that statistically stock splits do not really add any value to the company or the investment, but they have continued to be popular catalysts for a rise in share price.

There is no denying the effect it has on investors when they believe they can now ‘afford’ the stock. A couple of weeks ago, the Trade Desk (NASDAQ:TTD) announced a 10 for 1 stock split that was met with mixed results, even though the company blew away analyst expectations for the quarter. On Friday, another tech giant reported a stock split was on the way pending shareholder approval: NVIDIA ($320.83|2.06%).

NVIDIA is not talked about as much as I believe it should be. If you think NVIDIA is still just a graphics card company, you have some reading to do. NVIDIA still makes GPUs or graphics processing units, which are essential for rendering in video games. The company battles chip maker AMD (NASDAQ:AMD) in the GPU race which has seen AMD’s chips favored in the next generation consoles from Sony and Microsoft (NASDAQ:MSFT). NVIDIA’s GPU chips have actually outperformed those of AMD in benchmark testing, so it may not be long before NVIDIA’s RTX 30 GPUs are the preferred chip in the market.

NVIDIA also creates GPUs for data centers and leads AMD in this field by a healthy margin. Data centers represent one of the largest industries moving forward, with high usage in sectors like robotics, automation, artificial intelligence, autonomous driving, and 5G technology. In 2020, NVIDIA already made $6.7 billion in revenues from data centers, and what was once a small part of its portfolio, is on track to eventually beat out gaming GPUs as its largest money maker. 

What about CPUs? NVIDIA recently announced the Grace CPU, its first foray into the CPU industry, which has largely been dominated by Intel (NASDAQ:INTC). The Grace CPU is set to be launched in 2023, and is estimated to be able to handle 10x the performance of the top of the line CPU on the market today. NVIDIA is even developing a CMP, or crypto mining processor, to allow faster and more energy friendly performance for mining cryptocurrencies. 

Finally, NVIDIA’s CUDA platform is not often talked about as one of the potential game changers moving forward. NVIDIA has become a platform now, rather than a chipmaker. Over 2.2 million developers around the world use CUDA, and are integrated into NVIDIA’s hardware and software ecosystem. 

NVIDIA is currently a $373 billion company, and it still will be after the stock split, despite what some investors may believe. I think that NVIDIA has the run to become one of the next trillion dollar companies, and is the most important brand in the chip industry. NVIDIA is on pace to be one of the most powerful companies in the world, and it has nothing to do with how many times they split their stock.

Disclaimer: I have no positions in any of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.

Published On
2021-05-22 12:58

About the Author
Mike Sakuraba graduated with double major of English and Economics. Part time writer, part time investor, full time dad. Mike loves writing about technology, sports, and investing.

Analyst Ratings
Target Price $141.5
# of Analysts 35
Last updated 2021-12-01

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