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Stock Splits: What Investors Should Know

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  Published in Stocks and Investing on Saturday, January 24th 2026 at 11:41 GMT by The Motley Fool
      Locales: California, Texas, Washington, UNITED STATES

Understanding the Significance of Stock Splits

It's crucial to understand that a stock split is fundamentally a cosmetic maneuver. It doesn't alter the intrinsic value of a company. Instead, it serves as a mechanism to make shares more approachable to a wider range of investors. A lower price point can be psychologically appealing, potentially increasing demand and liquidity. While not a guaranteed outcome, this can often lead to increased trading volume and heightened visibility in the market. The excitement surrounding a potential split can also draw attention to the company and its performance.

Let's examine the current status and prospects of three companies frequently subject to stock split speculation: Amazon (AMZN), Nvidia (NVDA), and Costco (COST).

Amazon: A History of Hesitation

Amazon's stock currently commands a price exceeding $5,000 per share, reflecting its dominant position in both e-commerce and cloud computing. Historically, Amazon has been a subject of intense stock split speculation. However, the company's track record indicates a reluctance to embrace this strategy. While Amazon did execute stock splits in 1999, 2000, and 2004 - each a 2-for-1 split and one 3-for-1 split respectively - there hasn't been a split since. Current CEO Andy Jassy has emphasized the company's philosophy of not splitting stock simply for the sake of doing so, suggesting any future decisions will be carefully considered and driven by strategic rationale, not just market pressure. The significant valuation and overall performance of Amazon's business currently seem to outweigh the potential benefit of increased retail investor participation through a stock split.

Nvidia: Riding the AI Wave

Nvidia's remarkable ascent is inextricably linked to the explosive growth of artificial intelligence. Demand for its GPUs has propelled the stock price well above $300, making it a prime candidate for consideration of a stock split. Unlike Amazon, Nvidia hasn't split its stock since 1997. While not a critical factor in its ongoing success, a split could undeniably broaden the investor base, potentially attracting a greater number of retail investors. The recent surge in Nvidia's valuation driven by AI applications creates significant momentum, and a split could be interpreted positively by the market as a sign of continued confidence and accessibility. Given the rapid expansion and investor interest, the possibility of a split for Nvidia appears more likely than for Amazon.

Costco: Stability and Consistency

Costco, the membership-only warehouse club, maintains a stock price comfortably above $600. The company's success is characterized by consistent performance and strong financial fundamentals. Costco has only executed two stock splits: both 2-for-1 splits in 1999 and 2000. While the company's continued success is commendable, a stock split in the near term seems less probable. Costco's valuation reflects its established business model and reliable performance; a split wouldn't necessarily contribute significantly to its current trajectory.

The Verdict: Speculation and Potential

Predicting future stock splits with certainty is impossible. However, based on current trends and historical precedents, Nvidia appears to be the most likely candidate amongst these three giants. Amazon's past resistance and its current valuation suggest a lower probability, while Costco's consistent performance makes a split seem unnecessary. Ultimately, while a split doesn't change a company's core value, it remains a tool for market psychology and accessibility, and could significantly impact short-term trading activity.