Nvidia's stock price surges by 800% after ChatGPT release, but historical data suggests potential decline

From NASDAQ.: 2024-08-24 05:12:00

Nvidia’s stock price has surged by 800% since the launch of ChatGPT, making it the best-performing stock in the S&P 500 this year. The chipmaker recently completed a 10-for-1 stock split to make ownership more accessible, but historical data suggests that shares may decline in the coming months.

Stock-split companies have historically outperformed the S&P 500 in the 12 months following a split announcement, with an average return of 18%. However, Nvidia shares have performed poorly following past splits, with an average decline of 23% in the 12 months post-split. This trend suggests potential downside for the chipmaker.

Nvidia’s upcoming second-quarter earnings release will be a high-stakes event for investors. The company dominates the GPU and AI markets, and its Q1 financial results exceeded expectations. Analysts anticipate another strong quarter with revenue and earnings growth of over 100%. Uncertainty around the release of next-generation GPUs adds to the anticipation.

Investors should consider the elevated expectations and uncertainty surrounding Nvidia’s upcoming earnings when deciding whether to invest in the company. Buying a small position now and potentially adding more post-earnings may be a prudent strategy. The high-stakes nature of the upcoming earnings release makes it a crucial event for Nvidia shareholders.

Before investing $1,000 in Nvidia, consider the Motley Fool Stock Advisor’s list of the 10 best stocks for investors to buy now. While Nvidia is not on the list, the recommended stocks have the potential to produce significant returns. The Stock Advisor service offers insights and guidance for building a successful portfolio, with a track record of outperforming the S&P 500 since 2002.



Read more at NASDAQ.: Nvidia’s Stock Has Soared 30% Since It Announced Its 10-for-1 Stock Split. History Says This Will Happen Next.