Several major technology companies have executed stock splits in recent years, and as 2025 draws to a close, the stock market continues to exhibit robust performance. As of December 2, the S&P 500 and the Nasdaq Composite have shown impressive gains of 16% and 21%, respectively, for the year. Central to this growth has been the rise of artificial intelligence (AI) stocks, with companies such as Nvidia and Alphabet outpacing the major indexes. Additionally, tech giants like Apple, Meta Platforms, and Microsoft have also seen double-digit gains.
The trend of stock splits among these tech leaders is noteworthy, especially in the context of their soaring valuations. Understanding stock splits is crucial; when a company’s share price rises significantly, investors often perceive the stock as expensive. Although this perception doesn’t directly reflect the company’s valuation, it can lead to decreased trading volume, prompting companies to consider stock splits to make shares more accessible to retail investors.
For instance, if Microsoft, which currently has a share price of $490 and an outstanding share count of 7.4 billion, were to execute a 5-for-1 stock split, its shares would adjust to $98, with the outstanding shares rising to approximately 37 billion. This action doesn’t alter the company’s market capitalization but aims to attract a broader investor base, generating more market activity and interest.
In recent years, notable tech companies, including members of the “Magnificent Seven” such as Nvidia, Alphabet, Amazon, and Tesla, have opted to split their stocks. More recently, Broadcom and Netflix have followed suit. Trends indicate these stocks typically see sustained price appreciation prior to a split, which adds momentum to the decision.
Looking forward, Microsoft may consider a stock split in 2026 to rejuvenate investor interest. Despite a 92% increase in stock value during the AI revolution, Microsoft’s growth has lagged behind the broader Nasdaq index. The company last executed a stock split in February 2003, and since then, its stock has skyrocketed nearly 2,000%. However, Microsoft faced a decade of stagnant growth when it was perceived as lacking innovation compared to more agile competitors.
While Microsoft’s cloud service, Azure, has made significant strides in the AI domain, it still trails Amazon Web Services in market share. Furthermore, ongoing developments in chip technology might pose threats from other tech giants, with Alphabet potentially leading the charge.
Despite impressive advances, Microsoft is still often viewed as an outdated brand in contrast with its peers. The completion of stock splits by competitors might encourage Microsoft to consider a similar approach to boost excitement among investors. It’s crucial to note that this prediction regarding a possible stock split is speculative; the actual decision may depend on various factors.
Regardless of whether a stock split occurs, Microsoft remains a solid investment choice within the AI megacap sector, offering a compelling opportunity for long-term growth. The company aligns well with existing investments in cloud services and semiconductor designers, suggesting its sustained relevance in the evolving tech landscape.
