2 AI Stocks That Look Like They’re Ready to Split

Artificial intelligence (AI) stocks have led the current bull market, so it’s no surprise that there have already been several stock splits among AI stocks.

Nvidia And BroadcomTwo of the largest stocks in the chip industry have already completed 10-for-1 stock splits in recent months. Super microcomputeran AI server maker, is set to conduct its own 10-for-1 stock split, effective Oct. 1. Lam Search also announced a 10-for-1 split that will take effect October 2.

However, while many other AI stocks are booming, a number of contenders in the sector appear ready to split their shares.

While a stock split doesn’t change a stock’s fundamentals, investors typically welcome these moves because they act as a reset for the stock price, giving the stock another chance to soar. There’s also some evidence that stocks outperform in the year following a split, perhaps because stocks tend to split when management believes they have the momentum to continue moving higher.

Read on to find out two AI stocks that could split their shares in the near future.

1. ASML

ASML (ASML -3.97%) is the leading manufacturer of lithography equipment, the complex machines used to make semiconductors. ASML supplies companies such as Semiconductor manufacturing company in Taiwan, SamsungAnd Inteland it is the only manufacturer of extreme ultraviolet (EUV) machines used to manufacture the most advanced chips.

ASML’s leadership position in a crucial category of the semiconductor industry has given it a market capitalization of more than $300 billion and a stock price hovering around $800 per share. That makes the company eligible for a series of stock splits because it already has one of the highest individual share prices of any stock on the market.

ASML has done a stock split in the past, but there has not been a traditional stock split since 2000, when it did a 3-for-1 stock split. In 2007, it did an 8-for-9 reverse stock split, combined with a special dividend, and it did a synthetic buyback in 2012, as well as a 77-for-1 reverse stock split.

If the stock continues to gain, which seems like a good bet given AI’s growth, a stock split seems likely.

2. Equinix

Equinix (Equix 0.71%) is not your typical AI stock. The company is a real estate investment trust (REIT) and the largest data center REIT in the world, which gives investors exposure to the rise of AI from a different perspective. As a REIT, its growth rates tend to be modest, but the company still has a huge growth opportunity ahead of it, especially with the rise of data centers driven by AI.

Second-quarter revenue rose 7% to $2.2 billion, and the company posted its first quarter of earnings before interest, taxes, depreciation and amortization (EBITDA) above $1 billion, at $1.04 billion.

Equinix is ​​rapidly expanding its real estate base, with 54 major projects underway. The company also purchased a 200-plus-acre parcel in the Atlanta area, which it says will help it “pursue larger AI and hyperscale workloads in the U.S.”

Equinix appears to be a good candidate for a stock split, as the stock is currently trading at around $860. Equinix has never done a stock split, but did do a reverse stock split in 2002, from $1 to $32, after the stock price plummeted during the dot-com bust.

The data center REIT hasn’t made the kind of gains that other AI stocks have recently, so a stock split may not be as urgent. However, with the stock price approaching $1,000, a stock split could make it more attractive to retail and beginner investors, many of whom are eager to buy AI stock.

Jeremy Bowman holds positions in Broadcom. The Motley Fool holds positions in and recommends ASML, Equinix, Lam Research, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and Intel and recommends the following options: short November 2024 $24 calls on Intel. The Motley Fool has a disclosure policy.