Looking back at the bull market in the US stock market in the first half of this year, the performance of AI concept stocks is particularly eye-catching, becoming the main driving force of the market. "AI King" Nvidia has teamed up with a group of concept stocks to soar, but the sky-high stock price has put pressure on investors to continue buying.

Therefore, many AI concept stocks have announced stock splits one after another.$NVIDIA (NVDA.US)$The stock split was completed in June, and the pre-split surge is still vivid in investors' memory. Looking ahead, the "big player" in AI, $Broadcom (AVGO.US)$will also implement stock split plan. Specifically, Broadcom plans to implement a 1-for-10 split plan after market close on July 12, and the split shares will begin trading before market open on July 15.

Broadcom's CFO also said that the stock split will "make it easier for investors and employees to get Broadcom stock". Judging from Broadcom's stock performance, it has risen by more than 14% since the split plan was announced.

What effect does stock split have?

In fact, stock split itself will not lead to higher return, and will not increase or decrease any enterprise value. The total market value of the enterprise will remain unchanged. But stock split can indeed help specific investors to afford stocks. At the same time, stock split can also increase stock liquidity, reduce the bid-ask spread, and attract more funds to buy stocks.

A previous analysis report by Bank of America also shows that although stock split does not have any impact on the fundamentals of the enterprise, nor will it affect the market value of the enterprise, historically, stock split, especially positive stock split, is usually seen as a bullish signal by the market. According to the bank's statistics since 1980, the performance of S&P 500 index component stock companies that announced stock split in the first 3, 6, and 12 months after the initial announcement of the stock split plan is significantly better than that of the index, with the stock price of relevant enterprises rising an average of 25.4% in 12 months, while S&P 500 Index rose an average of 11.9% over the same period.

What do analysts think?

In addition to the impact of stock split itself, analysts are bullish on Broadcom's performance and revenue expectations after the split.

Bank of America has raised Broadcom's target price twice in a month, now seeing it as high as $2,150.

The bank said that Broadcom's EPS growth has reached double digits, and it has the best profitability, free cash flow generation, and return on investment in the semiconductor industry. Broadcom has high-quality products in the smart phone, cloud data center, telecommunications, and enterprise storage markets.

In addition to Bank of America, more than ten financial institutions have also raised Broadcom's target price.

Morningstar analysts said, "We continue to believe that Broadcom is in a very advantageous position in the long-term benefits of generated AI investment growth."

In addition, "stock god" Pelosi has recently invested in Broadcom.

According to records, on June 24, Pelosi bought 20 call options of Broadcom with an exercise price of $800 and a maturity date of June 20, 2025. The total value of this transaction is estimated to be between $1,000,001 and $5,000,000.

For the call options of Broadcom, whose exercise price is $800, it also has great potential for further increase, because Wall Street generally believes that Broadcom's stock will rise by at least 11% in the next 12 months.

Who will be the next?

With Nvidia, Broadcom, and other companies successively announcing stock splits, this year is considered to be the year of stock splits.

The US stock market has started to speculate on who will be the next to carry out stock splits. Many high-priced stocks have been mentioned, including $Super Micro Computer (SMCI.US)$, $Costco (COST.US)$etc.

When Nvidia announced its stock split, Bank of America predicted that Nvidia's announcement of stock split might mark the beginning of a trend, as the stock prices of other well-known tech giants had also risen enough to carry out similar stock splits.

The bank focused on analyzing 36 S&P 500 index component stock companies with a stock price higher than $500 and a total market value of $7.4 trillion. Among the "seven giants," Microsoft and Meta are both close to this threshold, and Broadcom, Super Micro Computer, and Netflix are also candidates.

From the current point of view, the call for Broadcom's stock split seems to have confirmed Bank of America's speculation. Currently, the most talked-about stock is $Meta Platforms (META.US)$Because only Meta among the seven giants has not yet split its stock.

Ken Mahoney, President of asset management company Mahoney, said that Meta's stock price has exceeded $500 and the timing of the split has matured. Therefore, we should closely monitor whether Meta takes any actions during this financial reporting season.

However, in the midst of a flurry of high-valued U.S. stocks splitting, Warren Buffett's Berkshire Hathaway appears somewhat unconventional.

Regarding the topic of stock splits, Buffett has clearly stated,$Berkshire Hathaway-A (BRK.A.US)$Never split, so he can attract like-minded investors, namely value investors who focus on long-term profits rather than short-term stock price fluctuations. Even if the stock price is too high to be reported by the NASDAQ trading system, it does not shake the idea of the stock god.

Buffett once wrote to shareholders, "People who buy stocks for non-value reasons will sell stocks for non-value reasons as well."

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Editor/Somer