1 Superb Stock-Split Stock to Buy Before It Does

What a difference a year makes. After the Nasdaq Composite shed 33% of its value in 2022 — one of the worst market performances in over a decade — the index has nearly returned to its former glory, closing the door on 2023 with a gain of 43%.

History offers a hint about what could be ahead in the coming year. Since it first began trading in 1972, in every year that followed a bear-market rebound, the tech-heavy index has continued to rally, gaining 19% on average. While there are no guarantees in investing, this suggests the current recovery has more room to run.

One strategy investors use to find winning stocks is to look at companies that have conducted stock splits in recent years, as those moves are historically preceded by years of robust gains. One such company is Nvidia (NASDAQ: NVDA). Over the past decade, the stock has generated total returns of 12,780%, resulting in a 4-for-1 stock split in mid-2021.

The chipmaker logged gains of 239% last year, which has some investors concerned about its valuation. However, a little digging will unearth evidence that the stock is cheaper than it might by some measures appear.

The AI catalyst

Recent advances in the field of artificial intelligence (AI) have been a boon for Nvidia. More specifically, generative AI went viral last year, and these algorithms have been applied to a wide variety of mundane, time-consuming tasks, resulting in greater productivity. Increased efficiency generally results in greater profits, and businesses have been scrambling to integrate AI models into their operations to benefit from the expected windfalls.

So why does this matter to Nvidia? In short, the company produces the gold standard of graphics processing units (GPUs), which can not only provide the computing power necessary to render lifelike images in video games but can also supply the computational horsepower necessary to support AI systems. This is all possible because of parallel processing, which takes…