After announcing the stock split, Broadcom's stock price has once again risen to a new historical high. Analysts are bullish on its business prospects, believing that the stock split will help increase liquidity and attract investors.
After announcing the stock split, $Broadcom (AVGO.US)$the stock price rose again.
As of the close of the U.S. stock market on the 17th, Broadcom reported $1828.87, up 5.41%, and the daily volume reached 8.7528 million shares, with a transaction amount of $15.892 billion, setting a new historical high.
Last Wednesday, Broadcom announced its second quarter results and a 10-for-1 stock split plan, which will start trading at split-adjusted prices on July 15. Kirsten Spears, CFO of Broadcom, said in a statement that the 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 bullish among analysts. It is believed that splitting expensive stocks is often a bullish signal for stock performance without affecting the overall valuation of the company.
Take Nvidia, the leader in AI chips, for example. From the announcement of the stock split to the execution, its stock price rose by 27%. According to Motley Fool's analysis, stock splits make stocks more liquid and attract more investors, and these benefits are enough to push Nvidia's market cap to break through the $3 trillion mark and become the world's most valuable company.
Obviously, investors also have similar expectations for Broadcom's future performance.
Although stock price appreciation is one of the reasons for stock splits, Broadcom's huge potential in the AI era is also a necessary reason for its split.
Broadcom acquired virtualization software expert VMWare at the end of last year, and VMware has been the main driver of its growth. According to analysis, Broadcom's second quarter revenue increased by 43% to $12.5 billion, higher than the expected $12 billion, but without VMware, its revenue growth forecast would only be 12%.
Although Broadcom's stock split plan has brought short-term positive impact to its stock price, market analysts remind investors that stock splits will not change the company's fundamentals. The long-term trend of stock prices still depends on the company's actual performance, market environment, and global economic situation.
Editor/Somer