Barron's Streetwise
Stock Splits + Semis
Feb 14, 2025
Medhi Hosseini, a semiconductor analyst at Susquehanna International Group, shares insights into the semiconductor industry's recent spending trends. He predicts a near-term peak in computing investments, sparking discussions on how this could impact the stock market. The conversation also dives into the mechanics and misconceptions around stock splits, revealing their potential to increase investor returns. Additionally, the episode highlights the significance of AI and cloud spending on the semiconductor landscape, alongside interesting anecdotes about meme coins.
29:49
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Quick takeaways
- The recent surge in stock splits, highlighted by firms like NVIDIA and Walmart, suggests increasing investor enthusiasm despite the lack of fundamental value enhancement.
- A predicted peak in semiconductor spending may prompt a shift in focus from traditional computing to networking solutions, crucial for advancing AI infrastructure.
Deep dives
Stock Splits and Market Trends
Stock splits have gained traction among companies, with significantly more announcements occurring recently compared to the past few years. Notably, research indicates that stocks typically enjoy substantial returns following split announcements, averaging around 25% in the year afterward, compared to just 12% for the market as a whole. Many high-profile firms have participated in splits, including NVIDIA and Walmart, suggesting a potential resurgence of interest in this strategy amidst rising share prices. This trend challenges the conventional wisdom around nominal share prices, as splits may drive demand and increase excitement among investors even if they do not inherently enhance a company's fundamental value.
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