Announcing the stock split to implementation, NVIDIA rose by 27%, is it Broadcom's turn now?

After announcing the stock split, Broadcom's stock price rose again.

As of the close of the U.S. stock market on the 17th, Broadcom was reported at $1828.87, up 5.41%. The total trading volume for the day reached 8.7398 million shares, with a trading amount of $15.868 billion, setting a new historical high.

Last Wednesday, Broadcom announced its second-quarter earnings and a 10-for-1 stock split plan, which will start trading at the adjusted price on July 15th. Broadcom's CFO, Kirsten Spears, stated in a release that this split will "make it easier for investors and employees to hold Broadcom's stock."

As a beneficiary of the booming AI industry, Broadcom's business prospects are generally well-regarded by analysts. Analysts believe that splitting expensive stocks to issue more shares without affecting the company's overall valuation is often a positive signal for stock performance.

Taking the AI chip leader NVIDIA as an example, from the announcement of the stock split to execution, its stock price surged by 27%. According to Motley Fool's analysis, stock splits make stocks more liquid and attract more investors, with these gains enough to push NVIDIA's market value past the $3 trillion mark, potentially becoming the world's most valuable company.

Clearly, investors also hold similar expectations for Broadcom's future performance.

While stock price appreciation is one of the reasons for stock splits, Broadcom's huge potential in the era of AI explosion is another necessary reason for its split.

Broadcom acquired virtualization software expert VMWare at the end of last year, with VMware being a major driver of its growth. According to analysis, Broadcom's second-quarter revenue grew by 43% to $12.5 billion, exceeding the expected $12 billion, but without VMware, its revenue growth forecast would only reach 12%.

Although Broadcom's stock split plan has brought short-term positive impacts to its stock price, market analysts remind investors that stock splits do not change the fundamentals of the company. The long-term stock price trend still depends on the company's actual performance, market conditions, and the global economic situation