Prediction: This Will Be the Next AI Company to Split Its Stock

In 2024, stock splits became a noticeable trend in the financial market, with many prominent companies engaging in this practice. Major players from various industries, including Walmart and Chipotle Mexican Grill, undertook stock splits last year. Notable tech firms like Nvidia and Broadcom significantly influenced the artificial intelligence (AI) sector by executing a 10-for-1 stock split each.

Investors are typically enthusiastic about stock splits. While a split does not alter a company's underlying fundamentals, it reduces the per-share price, making stocks more affordable for more investors. Additionally, a stock split can reflect management's confidence in the company's potential for growth from its new lower price.

This trend has led many investors to scout for companies poised for stock splits, especially those whose share prices have surged. Currently, there is one AI firm that appears ready for a split. Its stock rose 65% last year and now trades at over $600. My prediction is that this well-known company will be the next in the AI sector to announce a stock split.

The Only "Magnificent Seven" Company Yet to Split

Before revealing the name of this company, consider this clue: it is the only member of the so-called "Magnificent Seven" — the stocks that fueled last year's market increases — that has not executed a stock split in the past. I am referring to Meta Platforms (previously Facebook), which owns popular social media services such as Facebook, Messenger, WhatsApp, and Instagram.

Meta has enjoyed remarkable revenue and profit growth, driven by its dominance in social media, with over 3.2 billion active users daily across its platforms. As a result, its shares are currently trading close to an all-time high.

The majority of Meta's income comes from advertising, as advertisers strive to connect with users on its platforms. However, the company has made substantial investments in AI, which has become its top priority in the past year. Moreover, Meta has indicated plans to further increase its AI investments moving forward.

Aims to Make AI Accessible to All

CEO Mark Zuckerberg has expressed a vision for developing AIs that can assist all Meta users with their various needs, whether for work or personal use. To achieve this aim, the company has created its own large language model (LLM) and is presently training Llama 4, its latest version. During Meta's latest earnings call, Zuckerberg noted that Meta AI — the company's inaugural AI assistant — has seen rapid adoption and that Llama is quickly gaining recognition as a standard in the industry.

Meta has several pathways to excel in the AI field. First, as users engage more with its apps—thanks to anticipated AI tools and features—advertisers will likely increase their investments, leading to higher revenue for Meta.

Secondly, Meta's AI initiatives could pave the way for new products and services. Lastly, with its advancements in LLMs and cooperation with the developer community, Meta is positioned to establish itself as a prominent AI leader. Therefore, the company is on the verge of an exciting growth chapter.

Timing Is Right for a Stock Split

Now, let's analyze my prediction. Why is this an opportune moment for Meta to execute a stock split? Currently priced above $600, Meta's shares may deter some potential investors — despite its valuation appearing reasonable at around 24 times forward earnings estimates. Additionally, the psychological threshold of $1,000 per share may discourage some investors, as they might perceive the stock as too expensive regardless of its valuation.

Moreover, some investors lack access to fractional shares and may find it difficult to afford Meta's shares at their current price. By splitting its stock, the company can lower the per-share price, making it more attainable for these potential buyers.

Finally, as previously stated, Meta is expected to experience further growth due to its investments in AI, indicating that the stock has the potential to appreciate from any new lower price point.

All of these considerations lend weight to the idea of Meta announcing a stock split, which is why I predict it will be the next AI company to take this step. Nevertheless, even if a stock split does not occur, Meta continues to be a solid choice for long-term growth investors.

Stocks, AI, Investment