The birth of a $3 trillion semiconductor company

On June 5, local time, the three major U.S. stock indexes closed higher, with the S&P 500 and Nasdaq hitting record highs. Intel rose 2.5% and Microsoft rose 1.91%, leading the Dow. Nvidia rose 5.16%, continuing to hit a record high, with a total market value of over $3 trillion, surpassing Apple to become the world's second largest company by market value, second only to Microsoft.

In May this year, Nvidia announced that it would implement a "1-for-10" stock split plan, which would take effect on June 7. Shareholders registered before the close of June 6 would receive an additional 9 shares for each common share, and the company would also increase the dividend by 150% to $0.01 per share after the stock split. This is also the sixth stock split in Nvidia's history.

Nvidia's last stock split was announced in May 2021, when the stock price reached $600 and the split ratio was 1-for-4, which also brought the "threshold" to more than $100. Previously, in 2000, 2001 and 2006, the company split its stock at a ratio of "1-for-2", and in 2007 it split its stock at a ratio of "2-for-3". This time, Nvidia carried out the highest ratio stock split in history.

Although stock splits do not change the company's market value, they are often interpreted as a positive signal. The market generally believes that stock splits show that management is confident in the company's future growth and stock price, so this may increase the stock price in the short term.