On May 26th, when the tech giant Nvidia showed off its Q1 earnings, company leaders also revealed their plans to initiate a 4-for-1 split on July 19th. The stock went up over 21% since the announcement.

Many investors are now wondering: Is Nvidia a buy before its highly anticipated stock split which happens next month? Also, stockholders just approved a boost in the total amount of shares from 2 million to 4 million, which will help liquidity, since the stock can now be purchased for a reasonable price.

The approaching stock split will be the company’s fifth since going public. The GPU maker split its stock on a 2-for-1 in 2000, 2001, and 2006. It also split on a 3-for-2 basis back in 2007. Its current 2021 split will happen on a 4-for-1 basis, meaning investors will now get four shares for every one that they own.

The price of current shares will be divided by four. For example, instead of having one share — currently trading priced at $760 — after the split, investors will have four shares valued at $190 each.

While shares of Nvidia certainly look good today, the upcoming stock split is not the reason you should be buying up shares.

A better reason to buy up NVIDIA

Despite the stock split, there are better reasons to buy NVIDIA stock right now. The company’s impressive results and the growing opportunity ahead of it makes it a timely opportunity.

NVIDIA’s Q1 revenue went up to 84% y/y/ and its EPS went higher by 106%. To give a context, NVIDIA’s revenue of $5.66 billion by far beat the $5.3 billion it was hoping for. Revenue in the gaming sector increased 106% on greater demand for the company’s GPUs which are used by gamers. At this same time, its datacenter revenue also went up by 79% y/y on an increasing trend for NVIDIA’s advanced processors used for better cloud computing and artificial intelligence.

Given Nvidia’s impressive growth and its accelerating push into cloud computing, AI and gaming, there are many more reasons to be bullish for NVIDIA other than its stock split.

Author: Blake Ambrose

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