Stock split alert: 3 stocks that will increase shareholder value

On Wall Street, there are rarely two trends like artificial intelligence (AI) and stock split euphoria compete for attention. AI drove major indices to record highs in 2024, while stock splits, although cosmetic in nature, also fueled market excitement for certain names.

Stock splits come as forward or reverse splits, with forward splits being more popular with investors. Forward splits lower the stock price to attract investors, while reverse splits raise the price to meet stock market standards. In 2024, notable companies like the following attracted a lot of attention with their splits.

Let’s take a closer look at some of these splits, what they mean for investors, and whether future splits might be appropriate for these top technology companies.

Broadcom (AVGO)

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Investors continue to expect gains from Broadcom’s (NASDAQ:AVGO) recent split in a ratio of 10:1. Bank of America (NYSE:BAC) Analysis shows that stocks typically rise 25.4% within a year after a split, compared to 11.9% for the S&P500. On this mathematical basis alone, there is a case for buying this stock now.

City (NYSE:C) Analysts have recently noted Broadcom’s increasing momentum, citing growing investor interest due to its growing AI clientele and the VMware acquisition. While NVIDIA (NASDAQ:NVDA) remains the clear favorite player in the sector, but investor fatigue with other mega-cap chip names appears to be increasing Broadcom’s appeal.

At the time of writing, AVGO stock is trading just above $150 per share, with a market cap of $705 billion. Market analysts continue to praise Broadcom for its leadership in the semiconductor industry and infrastructure software, and praise its strategic product portfolio. So, could AVGO be among the next stocks to hit a $1 trillion valuation, as it is now just 50% away from that target?

AVGO stock is currently well positioned for further growth, experiencing strong growth thanks to its presence in AI and cloud computing. The company’s strong R&D investments and recurring revenue from infrastructure software support a solid business model. In addition, Broadcom’s recent acquisition of VMware is expected to fuel growth by integrating key AI tools. Broadcom’s strategy to lead in critical markets with high switching costs supports a positive long-term investment outlook.

Super Microcomputer (SMCI)

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Super-microcomputer (NASDAQ:SMCI) is another major beneficiary of the recent AI boom. Once a niche player, its liquid cooling technology now supports 30% of data center operations. SMCI recently reported quarterly revenue of $3 billion, more than its 2021 annual revenue, reflecting record demand for its solutions.

Analysts predict that the AI ​​market will grow from $200 billion to over $1 trillion by 2030, boosting Super Micro Computer’s prospects. Unlike Nvidia, whose revenue is based on new product releases, SMCI benefits from the integration of new chips from major manufacturers such as Nvidia and AMD (NASDAQ:AMD) into its products. This path has driven the company’s growth to five times the industry average. With advances in AI and the introduction of new chips, Super, Micro Computer is positioning its diversified strategy for continued success, regardless of the performance of individual chip makers.

Super Micro Computer benefits from AI growth and could offer better long-term returns than Nvidia. With a price-to-earnings ratio of 24 versus Nvidia’s 43, it’s a promising undervalued AI investment.

Palo Alto Network (PANW)

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Palo Alto Networks (NASDAQ:PANW) is a top cybersecurity stock that has risen 350% over the past 5 years. The company’s first-quarter results were impressive, with earnings per share coming in at $1.32 and revenue reaching $1.98 billion. With interest rates falling, the company expects to increase spending on cybersecurity.

Driven Technologies received NextWave Diamond Innovator status from Palo Alto Networks, joining a select group of top channel partners. This recognition underscores Driven Technologies’ comprehensive cybersecurity solutions, including AI-driven services. CEO Rudy Casasola emphasized that this status validates his team’s industry-leading expertise and use of Palo Alto Networks’ advanced tools.

In the cybersecurity sector, a market full of startups, Palo Alto Network has made a notable move in consolidating the sector with strong competition. PANW CEO Nikesh Aurora points out that since its acquisition in 2018, the company has evolved into a platform that offers integrated solutions for more secure access to services. Therefore, for those who are bullish on cybersecurity, this remains a top pick to consider in case of any share price declines in the future.

As of the publication date, Chris MacDonald did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s disclosure policies.

At the time of publication, the editor in charge did not hold any positions (either directly or indirectly) in the securities mentioned in this article.