Last week, Nvidia (NASDAQ:NVDA) announced a highly anticipated stock split, which, along with another stellar earnings report, helped propel NVDA stock above $1,000 per share. This development prompts the question: which “Magnificent 7” stock might be next to split its shares?

Tech Companies Tend to Follow Each Other

In the tech industry, companies often mimic each other’s corporate actions. For example, both Tesla (NASDAQ:TSLA) and Apple (NASDAQ:AAPL) split their shares in August 2020, while Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG) completed stock splits with similar ratios in 2022. During the dot-com boom of the 1990s, tech companies frequently split their stocks amid strong market rallies.

Influence of Corporate Actions Among Big Tech

Stock splits among Big Tech companies often correlate with their stock price movements. As the shares of these companies usually move in tandem, their stock splits tend to follow a similar trajectory. This pattern is also evident in dividend initiations. In 2024, both Meta Platforms (NASDAQ:META) and Alphabet initiated dividends, following Alibaba’s (NASDAQ:BABA) late 2023 dividend initiation. Amazon discussed the possibility of a dividend during its Q1 2024 earnings call but provided no timeline.

Why Companies Split Shares

Companies typically split their shares when the stock price becomes “costly” or “unaffordable” for retail investors. A lower share price can increase liquidity by making the shares more accessible. Although a stock split does not change a company’s fundamentals, it is often perceived positively by the market, leading to a rise in the stock price following the announcement.

Potential Candidates for the Next Stock Split

Among the “Magnificent 7” stocks, some can be ruled out as potential candidates for a stock split. Tesla’s shares are currently less than half of their 2021 highs. Amazon and Alphabet both conducted significant 20-for-1 splits in 2022, making another split unlikely in the near term. Apple’s most recent split was in 2020, and with its stock trading below its all-time highs and under $200, another split is not expected soon.

This leaves Meta Platforms and Microsoft (NASDAQ:MSFT) as the most likely candidates for the next stock split.

Microsoft: A Strong Contender

Microsoft, which went public in 1986, has split its shares nine times, with seven of those splits occurring during the 1990s internet boom. The last split was in 2003. Since then, Microsoft’s stock has surged, and at around $430 per share, it is the second-most expensive stock among the Magnificent 7. Microsoft, with a market cap of approximately $3.2 trillion, is currently the only company globally to command a market cap above $3 trillion. Given these factors, a stock split could make Microsoft’s shares more appealing and affordable for retail investors.

Meta Platforms: A Prime Candidate

Meta Platforms is the only member of the Magnificent 7 that has never split its shares. As a relatively newer publicly traded company, listed in 2012, this is somewhat understandable. However, with Meta now being a $1 trillion market cap company and its stock price among the highest in the Magnificent 7, a stock split could be a logical next step. Meta recently initiated a dividend, and with shares approaching $500, a split could be on the horizon.

Featured Image: Megapixl

Please See Disclaimer