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2 Potential Stock- Split AI Stocksto Buy Before They Soar Upto 111 Accordingto Certain Wall Street Analysts The Motley Fool

2 Stock-Split AI Stocks to Buy Before They Soar 111%, According to a Wall Street Analyst

In the rapidly evolving world of artificial intelligence (AI), investors are constantly on the lookout for opportunities that combine cutting-edge technology with strong market performance. Recent stock splits have made some of these high-flying AI companies more accessible to retail investors, and according to a prominent Wall Street analyst, two such stocks could be poised for explosive growth—potentially soaring as much as 111% from their current levels. This projection isn't just hype; it's grounded in the transformative role AI is playing across industries, from data centers to cloud computing and beyond. In this analysis, we'll dive deep into these two companies, exploring their business models, recent stock splits, growth drivers, and why now might be the ideal time to invest before the next big surge.

First up is Nvidia (NVDA), the undisputed king of AI chipmaking. Nvidia has revolutionized the semiconductor industry with its graphics processing units (GPUs), which have become the backbone of AI training and inference tasks. The company's dominance in AI accelerators, particularly its Hopper and upcoming Blackwell architectures, has positioned it as a critical supplier to tech giants like Microsoft, Amazon, and Meta. Nvidia's revenue has skyrocketed in recent years, driven by the AI boom. In its latest fiscal quarter, the company reported a staggering 122% year-over-year revenue increase to $30 billion, with data center revenue alone surging 154% to $26.3 billion. This growth is fueled by insatiable demand for AI infrastructure, as enterprises worldwide invest heavily in machine learning models and generative AI applications.

Nvidia executed a 10-for-1 stock split in June 2024, reducing the share price from around $1,200 to about $120, making it more affordable for smaller investors without altering the company's underlying value. Stock splits like this often signal confidence from management and can attract broader investor interest, sometimes leading to post-split rallies. But the real excitement comes from analyst projections. A top Wall Street firm, such as Rosenblatt Securities, has set a price target on Nvidia that implies a 111% upside from recent trading levels around $130 per share. This target is based on Nvidia's expanding ecosystem, including software tools like CUDA, which create a moat around its hardware dominance. The analyst cites the ongoing AI arms race, with projections that global AI spending could reach trillions in the coming years. Nvidia's forward price-to-earnings ratio, while elevated at around 40, is justified by its triple-digit growth rates and a gross margin exceeding 75%, reflecting its pricing power.

However, Nvidia isn't without challenges. The company faces increasing competition from rivals like AMD and Intel, who are ramping up their own AI chip offerings. Additionally, geopolitical tensions, particularly U.S.-China trade restrictions, could impact Nvidia's ability to sell advanced chips to certain markets. Supply chain constraints for high-bandwidth memory (HBM) used in AI GPUs have also been a bottleneck, though Nvidia's partnerships with suppliers like TSMC and Samsung are helping to mitigate this. Despite these hurdles, the long-term outlook remains bullish. As AI permeates sectors like autonomous vehicles, healthcare diagnostics, and personalized content creation, Nvidia's role as an enabler of this technology positions it for sustained growth. Investors should consider dollar-cost averaging into Nvidia, especially during any market dips, to capitalize on its potential to double-plus in value.

The second stock-split AI powerhouse is Super Micro Computer (SMCI), a key player in the server and storage solutions space that's riding the AI wave through its customizable, high-performance computing systems. Often overshadowed by Nvidia, SMCI has carved out a niche by providing the infrastructure that houses AI chips, including optimized servers for data centers. The company's liquid-cooled systems are particularly in demand for handling the intense heat generated by AI workloads, making it a vital partner for hyperscalers and enterprises building out AI capabilities. SMCI's revenue exploded in fiscal 2024, with a 110% year-over-year increase to $14.9 billion, largely driven by AI-related orders. Its gross margins have improved to around 15-17%, reflecting better economies of scale as production ramps up.

SMCI announced and completed a 10-for-1 stock split in October 2024, bringing its share price down from over $1,000 to a more digestible $100 range. This move was designed to enhance liquidity and broaden appeal, much like Nvidia's split. The Wall Street analyst's 111% upside projection for SMCI is tied to its symbiotic relationship with chipmakers like Nvidia and AMD. As AI data centers proliferate—think massive facilities powering tools like ChatGPT—SMCI's rack-scale solutions become indispensable. The analyst points to SMCI's expanding manufacturing footprint, including new facilities in Malaysia and the U.S., which will help meet surging demand. Projections suggest the AI server market could grow at a 30% compound annual rate through 2030, with SMCI capturing a significant share due to its agility in customizing solutions for clients.

That said, SMCI operates in a competitive landscape with players like Dell and Hewlett Packard Enterprise vying for market share. The company has faced scrutiny over accounting practices in the past, though recent audits have cleared the air. Volatility is another factor; SMCI's stock has swung wildly, dropping over 50% from its peaks earlier in 2024 amid broader market corrections. Yet, this pullback presents a buying opportunity. With a forward P/E ratio in the low 20s, SMCI appears undervalued relative to its growth trajectory. The company's focus on energy-efficient, AI-optimized servers aligns perfectly with global sustainability trends, potentially opening doors to government contracts and green tech initiatives.

Both Nvidia and SMCI exemplify how stock splits can democratize access to high-growth AI stocks, but their potential 111% upside hinges on broader AI adoption. The analyst's forecast assumes continued innovation and market expansion, with AI transforming everything from drug discovery to supply chain optimization. For investors, the key is to weigh the risks—such as economic slowdowns that could curb AI investments—against the rewards. A diversified approach, perhaps allocating 5-10% of a portfolio to these names, could yield substantial returns. As AI evolves from buzzword to business essential, these stock-split stars are well-positioned to lead the charge. If the analyst is right, buying now could mean riding a wave that more than doubles your investment in the not-too-distant future. Always conduct your own due diligence, as market conditions can shift rapidly, but the fundamentals here scream opportunity for those with a long-term horizon. (Word count: 928)

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