From Nasdaq:

Over the past year, technology stocks like Microsoft have soared, making it difficult for individual investors to buy shares. In light of this, Microsoft is considering a stock split, which is a common practice that can benefit both investors and employees. Microsoft has split its stock multiple times before, and it hasn’t done so in many years.

Stock splits can benefit both investors and employees by making it easier to accumulate shares and liquidate assets. Microsoft’s potential stock split in 2023 comes as the company enters a new era marked by the rise of artificial intelligence. However, it’s important for investors not to think that a lower share price means a cheaper valuation. In the end, stock splits allude to a company’s profitability.

If Microsoft decides to undergo a 10-for-1 stock split, the company’s P/E ratio would remain the same, indicating that investors should consider factors beyond a potential split when deciding whether to buy the stock. Analysts see potential in Microsoft, with expectations of 15% annual earnings growth, but this growth may not align perfectly with Microsoft’s current valuation.

Investors should base their decision to buy Microsoft on fundamental factors and not just a possible stock split. The Motley Fool has recommended Microsoft as a stock to watch, along with nine other overlooked stocks. As of February 12, 2024, Justin Pope has no position in any mentioned stocks. The Motley Fool has positions in and recommends Microsoft and recommends long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft.

In conclusion, Microsoft’s consideration of a stock split highlights the changing landscape of the technology industry. However, investors should use careful consideration and analysis before making any investment decisions, focusing on the fundamental aspects of the company’s future growth.



Read more: Stock-Split Watch: Is Microsoft Next?