Stock-Split Watch: Is Broadcom Next?
Feels Like You’ve Been Here Before The semiconductor and software giant Broadcom: (NASDAQ: AVGO) implemented a 10-for-1 stock split over the summer.However, I’m waving another potential stock split flag here.
Maybe that’s a good thing.Broadcom shares are up nearly 30% since its latest split, though most of that has happened in just the past few weeks.
Does it make sense to break up again? stock splits Don’t make stocks fundamentally cheaper. they lower the share price by proportionally increasing the total number of shares outstanding.
So should investors expect Broadcom to announce another stock split soon?
Most companies split their shares to facilitate trading by smaller investors and employees. Investors can accumulate shares in the company without the need for deep pockets. At the same time, employees who have significant gains on the stock they received as compensation appreciate having more control over how much they cash out at a time.
There are no rules about why or how often a company can split its stock.Broadcom wouldn’t even be the first company to split its stock multiple times in a short period of time. Tesla Conducted two stock splits between August 2020 and 2022. Each share owned by investors prior to those splits would be worth 15 shares today.
Granted, Tesla’s splits happened about two years apart, and Broadcom’s last split was just five months ago. : However, I think there is a strong chance of another split in the next few years.
Broadcom recently announced exciting developments in its artificial intelligence (AI) capabilities when it reported earnings for the 4th quarter of fiscal year 2024 (ended November 3). Broadcom is developing XPU (extreme processing unit) AI chips for three major customers, with two more in development.Management would not release names, but OpenAI and Apple: They are reported to be among them.
These XPU chips are reportedly used for AI inference, helping AI models effectively apply their trained intelligence to new data they haven’t seen before.You can think of AI learning as achieving intelligence and AI conclusion as: using it. It’s a different program than the training of artificial intelligence models that Nvidia dominates with its accelerator chips, according to the company last conference callBroadcom’s management believes that the revenue opportunity related to artificial intelligence will reach $60-90 billion by 2027, and the company is poised to capture most of it.
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