The past few years have seen a return to the popularity of stock splits. The practice was a regular occurrence during the 1990s and had fallen by the wayside, but has experienced a renaissance in recent years. A stock split is typically the result of years of strong business and financial results, which fuel a soaring stock price. Over the past year or so, artificial intelligence (AI) has added a new element to the mix, propelling some companies to dizzying new heights.
What’s even more intriguing is that history shows the strong performances that precede stock splits tend to continue. Companies that conduct stock splits generally deliver stock price increases of 25%, on average, in the year following the announcement, compared with average increases of 12% for the S&P 500, according to data compiled by Bank of America analyst Jared Woodard.
Here are three stock-split AI stocks that still have a long runway ahead, according to select Wall Street analysts.
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Broadcom: Implied upside 57%
The first stock-split stock with a boatload of upside potential is Broadcom (NASDAQ: AVGO). What sets the company apart is the breadth of its offerings, which include software, semiconductor, and security products across cable, broadband, mobile, and data center industries.
To give this some context, “99% of all internet traffic crosses through some type of Broadcom technology,” according to the company. This puts Broadcom in a crucial place in the accelerating adoption of AI.
The critical nature of its offerings is translating into improving results. In the second quarter, revenue jumped 43% year over year to $12.5 billion, driving adjusted earnings per share (EPS) up 6% to $10.96. The company is still digesting its acquisition of VMWare late last year, which is weighing on profits, but management is predicting a return to form in fiscal 2025. The company’s forecast suggests its robust growth will continue as management increased its full-year revenue guidance to $51 billion, or growth of more than 42%.
Broadcom’s track record of consistent growth and savvy…
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