Stock splits, once a prevalent practice in the late 1990s, have made a notable comeback in recent years as companies seek to keep their high-performing stocks accessible to a wider range of investors. The resurgence of stock splits parallels a robust bull market bolstered by artificial intelligence advancements and strong corporate earnings, which has propelled market indices to record highs. Notably, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite have all achieved milestones not seen in years, raising optimism about the continued upward trajectory of the market.
Ryan Detrick, the chief market strategist at Carson Group, shares valuable insights indicating that bull markets extending beyond three years tend to persist, typically lasting around eight years, with even the shortest duration being five years. This optimistic outlook sets the stage for a discussion on two notable stocks that have thrived recently yet remain solid investment choices.
Broadcom has experienced an impressive 337% increase over the past two years. The company is leveraging the AI revolution, catering to evolving needs within the tech landscape. While graphics processing units (GPUs) were initially the go-to chips for powering the large language models essential for AI, Broadcom has positioned itself to meet the demand for more energy-efficient alternatives through its application-specific integrated circuits (ASICs). Recently, Broadcom forged a multibillion-dollar agreement with OpenAI to supply 10 gigawatts of ASICs over the next four years, reaffirming its pivotal role in the industry. Analysts project Broadcom’s AI revenue could soar to between $60 billion and $90 billion by 2027.
Currently valued at around $339.81 per share, Broadcom is witnessing favorable analyst opinions, with 94% of recommendations falling into the buy or strong buy categories. Additionally, Broadcom’s PEG ratio of 0.43 suggests that it is undervalued considering its growth potential, despite trading at 32 times the expected earnings for the coming year. Given its current price and performance trajectory, a stock split could be on the horizon.
Another impressive performer, AppLovin, has skyrocketed by an astonishing 1,780% in the same period. The adtech company has revolutionized how app developers market and monetize their products, offering a suite of tools that includes the innovative Axon self-service ad platform and the Max supply-side platform. AppLovin’s stock recently gained entry into the S&P 500, reflecting its significant growth and recognition in the market.
Trading at approximately $674.87 per share, AppLovin reported third-quarter revenue of $1.4 billion, which marked a substantial 68% year-over-year increase, alongside a 96% rise in diluted earnings per share. The company’s ability to generate significant cash flow further solidifies its promising future. With 81% of analysts recommending it as a buy or strong buy, AppLovin appears primed for further growth and potential stock splits.
Both Broadcom and AppLovin exemplify the potential for sustained investment growth in a market that is currently trending toward longer bull cycles, supported by advancements in technology and favorable corporate earnings reports.
