Home » Nvidia Executed a 10-for-1 Stock Split. Here’s What Happened the Last 5 Times the Artificial Intelligence (AI) Stock Split.

Nvidia Executed a 10-for-1 Stock Split. Here’s What Happened the Last 5 Times the Artificial Intelligence (AI) Stock Split.

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Nvidia (NASDAQ: NVDA) recently executed a 10-for-1 stock split to reset its share price, which had surged 725% during the preceding 18 months. The driving force behind that performance was booming interest in artificial intelligence. However, the odds are now stacked against Nvidia. History says the stock is headed for a sharp decline.

Nvidia announced its stock split on May 22, and its share price has since increased 33%. But since 2010, companies have seen their share prices increase just 18.3% on average during the 12 months following a stock split announcement, according to Bank of America. That implies about 15% downside for Nvidia over the next 11 months.

Even more worrisome, Nvidia has consistently lost momentum following previous stock splits. Here’s what happened the last five times.

Nvidia has completed six stock splits as a public company. The last five splits are listed in the chart below, along with the share price appreciation (or depreciation) over the next six months, one year, and two years. Generally speaking, Nvidia has performed poorly following stock splits.

Stock Split Date

6-Month Return

1-Year Return

2-Year Return

June 2000

(50%)

28%

(52%)

September 2001

44%

(72%)

(49%)

April 2006

63%

1%

(6%)

September 2007

(45%)

(70%)

(53%)

July 2021

30%

(4%)

145%

Average

8%

(23%)

(3%)

Data source: YCharts.

As shown above, Nvidia returned an average of 8% during the six-month period following past stock splits. But shares declined by an average of 23% during the first year, and they were still down 3% on average after two years. Past performance is never a guarantee of future results, but we can apply that information to the current situation to make an educated guess.

Specifically, Nvidia shares have advanced 4% since the company executed its 10-for-1 stock split on June 7. That implies 4% upside through December 2024. But it implies 27% downside by June 2025 and 7% downside through June 2026. However, drawing comparisons to the current situation is difficult because the last five stock splits happened near market crashes.

Most notably, the dot-com bubble became a bear market between March 2000 and October 2002, during which the S&P 500 declined 49%. And the subprime mortgage crisis became a bear market between October 2007 and March 2009, during which the S&P 500 declined 57%.

The fifth stock split also occurred in close proximity to a bear market. The S&P 500 tumbled 25% between January 2022 and October 2022. But Nvidia shareholders were probably saved from steep losses by the launch of ChatGPT in November 2022, the generative AI application that sparked unprecedented demand for Nvidia graphics processing units (GPUs).