Stock markets have been unpredictable in recent years, with many companies enjoying strong growth in 2021 amid COVID-19 lockdowns, but the following year's macroeconomic decline in 2022. The stock price went down and I lost everything I had gained. But inflation and excitement are easing. The impact of emerging markets such as artificial intelligence (AI) appears to suggest that the worst of the downturn is over for now.
of Nasdaq Composite It's up 43% in 2023 and could continue its upward trend into the new year. On the other hand, companies that have recently undergone stock splits are often attractive investment options, as they often offer significant subsequent gains.
Here are two stock split stocks that the smartest investors are buying heading into 2024.
1. Nvidia
Nvidia's (NASDAQ:NVDA) The business has grown explosively in recent years, with the company's stock price soaring more than 1,000% since 2018. In response to impressive growth, management implemented a 4-for-1 stock split in July 2021, marking the company's fifth stock split since 2000. And the company appears to be on the verge of turning a profit. started.
Over the past 12 months, Nvidia has emerged as one of the biggest players in artificial intelligence, achieving an estimated 90% market share in AI chips. According to Grand View Research, the AI market is projected to expand at a compound annual growth rate (CAGR) of 37% through 2030, and valuations are expected to exceed $1 trillion by the end of this decade. I am.
Nvidia, on the other hand, has gotten a head start on other chipmakers, supplying most of the market with its hardware. The company's revenue soared due to increased demand for AI graphics processing units (GPUs). In the third quarter of fiscal 2024 (ending October 2023), Nvidia recorded a revenue growth of 206% due to a surge in chip sales in its data center division, and operating profit increased by more than 1,600%.
This chart shows that NVIDIA's earnings could reach $24 per share by fiscal year 2026. Multiplying this number by the forward price-to-earnings ratio of 40 yields a potential stock price of $960, representing 94% growth over the next two fiscal years.
As a major chip manufacturer, Nvidia plays a useful role in the technology sector. Its hardware powers multiple areas, from AI models to cloud platforms, video consoles, laptops, and more. Its solid long-term outlook makes it a good stock split stock to watch in the new year.
2.Amazon
Amazon (NASDAQ:AMZN) The company has split its stock four times since its initial public offering in 1997, with the most recent stock split taking place in June 2022 at a 20:1 split.
The company has achieved great success over the years by leading in two important areas: e-commerce and cloud computing. Online retail alone is expected to exceed $3 trillion in 2023 and grow at a CAGR of 10% until at least 2028. Amazon, on the other hand, dominates the industry in multiple countries.
Due to the economic downturn in 2022, e-commerce faced several obstacles. But Amazon's recent quarterly results show the industry is back to growth. In the third quarter of 2023, the company posted 13% year-over-year revenue growth, beating Wall Street expectations by $1.5 billion.
The increase was primarily due to the impressive turnaround in the North American division, which posted operating income of more than $4 billion after suffering a loss of $412 million in the same period last year.
In addition to e-commerce, Amazon also holds the largest market share in cloud computing with Amazon Web Services (AWS), which it uses to create a promising position in the AI space. The tech giant has invested heavily in technology, and last year he introduced various AI tools to AWS and announced a venture into chip development.
Amazon has significant long-term growth potential, making it even more attractive. Price to sales ratio 2.8's. The chart above shows that this number is the lowest among the tech industry's most prominent companies, suggesting that Amazon's stock is the most valuable. This makes it natural for the retail giant to invest in his 2024.
Should you invest $1,000 in Nvidia right now?
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Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool's board of directors. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool's board of directors. Alphabet executive Suzanne Frye is a member of The Motley Fool's board of directors. dani cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has Disclosure policy.
2 stock split stocks the smartest investors are buying in 2024 Originally published by The Motley Fool
