Stock Split Fever: Recent Splits and Potential Candidates Outperforming Market Giants

Stock-Split Fever: 2 Recent Stock-Split Stocks and 1 That Could Be Next

Nvidia's sky-high valuation could be a warning sign Jake Lerch (Nvidia): There's no way to talk about stock-split mania without discussing Nvidia. Simply put, the stock market has gone gaga over Nvidia -- taking the company from a market cap of $280 billion to over $3 billion in just under two years. As a result of its skyrocketing stock price, Nvidia's board of directors authorized a 10-for-1 stock split in May of this year, bringing the company's stock price down from over $1,200 to around $120. That stock split, like all common stock splits, did not change any of the company's fundamentals. Similar to running a pizza cutter across a freshly baked pizza, a stock split simply divides what already exists into smaller, more manageable pieces; it doesn't create more pizza. Ultimately, investors need to pay attention to Nvidia's fundamentals -- now more than ever. To put it bluntly, the company's stock is nearing levels that should give investors pause. Take the stock's price-to-sales (P/S) ratio, for example. Nvidia stock has a lifetime P/S ratio of 8.4x. That's much higher than the average stock, which trades with a P/S ratio closer to 3x. However, within the tech industry, P/S ratios of 6 to 10 are common. Yet, what is truly concerning is that Nvidia's current P/S ratio isn't anywhere close to that range -- it's 37x. Accordingly, investors today are paying about 4 times above its long-term historical P/S average. NVDA PS Ratio data by YCharts So, even after Nvidia's enormous revenue growth (company revenue has nearly tripled from $25 billion to $70 billion over the last two years), much of the rise of Nvidia's stock is coming from investors paying higher prices. In short, investors are paying up for future growth and hoping that the company can meet -- or beat -- rising sales expectations. That's a risky proposition, meaning investors might want to look elsewhere for a better value. Broadcom's first-ever stock split could juice an already supercharged stock Will Healy (Broadcom): Broadcom just executed its first stock split. The technology giant has dramatically benefited from artificial intelligence (AI), and its stock has increased by more than 80% over the last year. Despite those gains, it is not necessarily too late to buy. Broadcom leverages AI in two ways. Its business-to-business chip solutions segment designs specialized semiconductors for its clients, and as such, it creates chips to support AI. Also, amid a growing enterprise software business, it can underpin a client's software needs. Those capabilities appeared to bolster its stock gains, particularly over the last year. That growth, in turn, likely prompted the 10-for-1 stock split it initiated on July 12. Still, investors should remember that Broadcom has been a growth stock throughout its history. The former Avago Technologies launched its IPO at a split-adjusted price of just $1.50 per share in 2009. During that time, the stock price grew by more than 100-fold. So massive was its growth that its dividend, now at $2.10 per share annually, is 40% higher than the original IPO price! Despite such increases, investors have to look past a critical financial metric. In the first six months of fiscal 2024 (ended May 5), net income of $3.4 billion dropped 53% yearly. That may deter investors, especially since that contributed to the P/E ratio rising to 69. Admittedly, the high P/E ratio makes it expensive, and the stock is likely not invulnerable to a downturn should market sentiment change. However, investors should keep in mind that revenue rose 39% yearly over the same period, and the company used some of the revenue increase to invest in itself when it increased operating expenses by 150%. Such actions could increase profits in the long term, taking the stock price higher over time. Additionally, the split could help as the lower nominal price makes whole shares more affordable, a factor that should add to its considerable long-term gains. Tech giant Microsoft is becoming an increasingly obvious stock-split candidate. Justin Pope (Microsoft): Tech giant Microsoft hasn't split its stock in recent memory, but that could soon change. The company frequently split during the 1990s until the infamous dot-com bubble popped in 2000. Shares plunged and took nearly two decades to recover. But Microsoft has now risen to levels few may have predicted. Technologies like cloud computing and artificial intelligence have continued to fuel non-stop growth over the past decade: MSFT data by YCharts Now, shares are much higher than they were years ago. Investors and employees sitting on massive investment returns from holding stock may not want to sell in $400 to $500 increments. A stock split would lower the share price and give them some flexibility. It would also make it easier for those buying stock to build a position without having a lot of money for big purchases. A potential stock split may become more sensible over time. Analysts believe Microsoft will grow earnings by an average of over 16% annually for the next three to five years. The stock trades at a forward P/E ratio of 34, which is reasonable considering Microsoft's anticipated growth. The bottom line? Shares are poised to climb higher on strong earnings growth over the coming years, so a split only makes sense. Investors should keep Microsoft on their radar as the next potential stock split. The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $722,626!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Jake Lerch has positions in Nvidia. Justin Pope has no position in any of the stocks mentioned. Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill, Lam Research, Microsoft, Nvidia, and Walmart. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

2 Stock-Split Stocks That Can Crush Nvidia in the Return Column Over the Next 3 Years

Within the last two weeks, we've witnessed the ageless Dow Jones Industrial Average, benchmark S&P 500, and growth stock-inspired Nasdaq Composite catapult to record closing highs. While excitement surrounding the rise of artificial intelligence (AI) has played an undeniable role in sending the broader market higher, don't overlook the other key trend powering the indexes to new heights: Stock-split euphoria. A stock split is an event that allows a publicly traded company to adjust its share price and outstanding share count, all while having no effect on its market cap or operating performance. It's a purely cosmetic maneuver that's often effected with purpose. Image source: Getty Images. Stock splits come in two varieties: Forward and reverse. Companies conducting forward-stock splits are aiming to make their shares more nominally affordable for retail investors and their employees. Meanwhile, businesses enacting reverse-stock splits are purposely increasing their share price, usually with the goal of maintaining minimum share price listing standards on a major stock exchange. Although some companies completing reverse-stock splits have gone on to be wildly successful, most reverse splits are enacted from a position of weakness. Comparatively, high-flying stocks that need to reduce their share price to make it more nominally affordable for investors and employees are typically out-executing their competition. This disparity is why most investors tend to gravitate to companies enacting forward-stock splits. Since 2024 began, in the neighborhood of a dozen top-tier businesses have announced stock splits. However, the outlooks for these stock-split stocks differ meaningfully. While AI juggernaut Nvidia (NASDAQ: NVDA) has shouldered the load in sending the major stock indexes to fresh record closing highs, it's my belief that two other stock-split stocks are positioned to absolutely crush Nvidia in the return column over the next three years. The going is about to get considerably tougher for Nvidia Nvidia's stock has risen by 765% between the start of 2023 and the closing bell on July 16, 2024, which translates into a gain of more than $2.7 trillion in market value. This outsized gain is what convinced the company's board to approve a historic 10-for-1 stock split on May 22. On paper, everything has gone Nvidia's way. The company's H100 graphics processing unit (GPU) offers clear compute advantages over what few other AI-GPU options are available. As a result, Nvidia was responsible for roughly 98% of the 3.85 million AI-GPUs shipped last year, according to TechInsights. Furthermore, demand for Nvidia's chips has overwhelmed its supply. This allowed Nvidia to rapidly increase the selling price of its chips, which drove its adjusted gross margin to a scorching 78.35% during the fiscal first quarter (ended April 28). Though things seem great on the surface, history, competition, and valuation are all headwinds that suggest Nvidia could struggle mightily in the coming years. The headwind I continually return to with Nvidia and artificial intelligence is that there hasn't been a single buzzy innovation, technology, or trend for 30 years that's escaped an early innings bubble. Investors consistently overestimate the adoption rate and utility of next-big-thing innovations, and I don't see AI bucking this trend. If the AI bubble bursts, no company is going to take it on the chin more than Nvidia. This is a company that can also be hurt by competition -- even if it maintains its GPU compute advantages. Stalwarts like Intel and Advanced Micro Devices are rolling out competing chips to the H100 in AI-accelerated data centers. Moreover, all four of Nvidia's top customers, which account for around 40% of its net sales, are developing in-house AI-GPUs. With demand swamping supply, Intel and AMD should have no trouble gaining market share in high-compute data centers. All the while, AI-GPU scarcity, and Nvidia's pricing power, will wane. The final trouble spot is Nvidia's valuation. Although its forward price-to-earnings (P/E) ratio isn't off the charts, its trailing 12-month (TTM) price-to-sales (P/S) ratio is on par with the peak TTM P/S ratios seen from the likes of Cisco Systems and Amazon prior to the bursting of the dot-com bubble. All signs point to Nvidia's stock struggling mightily over the next three years -- and the following two stock-split stocks leaving it in the dust. The first stock-split stock with the tools and intangibles needed to handily outperform Nvidia in the return column over the next three years is satellite radio operator Sirius XM Holdings (NASDAQ: SIRI). Sirius XM is the only high-profile stock split of 2024 that's of the reverse-split variety. When Sirius XM completes its merger with Liberty Media's Sirius XM tracking stock, Liberty Sirius XM Group, during the third quarter, a 1-for-10 reverse split will be conducted. What gives Sirius XM a high probability of outperforming Nvidia by the midpoint of 2027 is its abundance of competitive advantages. To start with, it's the only licensed satellite radio operator. While it still competes for listeners with terrestrial and online radio providers, being the only licensed satellite radio operator gives it meaningful subscription pricing power. More importantly, Sirius XM's operating model is markedly different than traditional radio providers'. Whereas online and terrestrial radio stations rely heavily on advertising to keep the lights on, Sirius XM brought in less than 19% of its $2.16 billion in first-quarter revenue from advertising (which traces back to its Pandora Media subsidiary). Advertising revenue can be prone to wild swings that are dependent on the health of the U.S. and global economy. Comparatively, Sirius XM generated almost 78% of its sales from subscriptions in the March-ended quarter. Subscribers are far less likely to cancel their service than advertisers are to pare back their spending during an economic downturn. In short, Sirius XM is better-positioned than its radio peers for whatever the U.S. economy throws its way. There's also a level of cost transparency with Sirius XM that won't be found with other radio operators. No matter how many subscribers Sirius XM adds over time, its transmission and equipment costs aren't going to vary much, if at all. Lastly, there's an undeniable value proposition with Sirius XM. Shares are valued at just 12 times forward-year earnings, which represents a 34% discount to its average forward-year earnings multiple over the trailing five-year period. Sony Group The other stock-split stock with all the necessary catalysts to absolutely crush Nvidia in the return department over the next three years is Japan-based consumer electronics powerhouse Sony Group (NYSE: SONY). On May 14, the company's board announced plans to conduct a 5-for-1 forward-stock split. For the company's American Depositary Receipts (ADRs), the record date for this split is Sept. 30, with an effective date of Oct. 8. In other words, Sony's stock is still roughly two-and-a-half months away from becoming nominally cheaper. Sony is probably best-known for its gaming prowess, even though sales of its flagship PlayStation 5 have tapered a bit since its release in late 2020, during the height of the COVID-19 pandemic. The good news is that its gaming segment has two catalysts to look forward to through 2027. For starters, subscription revenue tied to PlayStation Plus has been climbing. PlayStation Plus is a multi-tiered service that gives subscribers the ability to game with their friends, and save their gaming data in the cloud. It's a high-margin service that's likely to keep subscribers loyal to the Sony brand. To add to this point, Sony's next-generation console is liable to come to market sometime between late 2026 and early 2028. Since next-gen console sales have historically been a key revenue driver for Sony, it wouldn't be a surprise to see shares reacting positively well before the debut of a new console. Beyond gaming, Sony Group is one of the top suppliers of image sensors used in smartphones. Wireless companies upgrading their networks to support 5G speeds have fueled a steady device replacement cycle that's lifted sales for the company's Imaging and Sensing Solutions (I&SS) segment. I&SS segment sales are forecast to grow by 15% this year. Sony Group's board also believes the company's shares are trading at a discount. On the same day its 5-for-1 forward split was announced, the board approved the repurchase of up to 30 million outstanding shares (on a post-split basis). For businesses with steady or growing net income, stock buybacks have a way of lifting earnings per share and making fundamentally sound companies look even more attractive. The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $722,626!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Sean Williams has positions in Amazon, Intel, and Sirius XM. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Cisco Systems, and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel and short August 2024 $35 calls on Intel. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

2 Stock-Split Stocks That Can Crush Nvidia in the Return Column Over the Next 3 Years | The Motley Fool

Move over, Nvidia: Two other stock-split stocks have a clear path to sizable gains. Within the last two weeks, we've witnessed the ageless Dow Jones Industrial Average, benchmark S&P 500, and growth stock-inspired Nasdaq Composite catapult to record closing highs. While excitement surrounding the rise of artificial intelligence (AI) has played an undeniable role in sending the broader market higher, don't overlook the other key trend powering the indexes to new heights: Stock-split euphoria. A stock split is an event that allows a publicly traded company to adjust its share price and outstanding share count, all while having no effect on its market cap or operating performance. It's a purely cosmetic maneuver that's often effected with purpose. Stock splits come in two varieties: Forward and reverse. Companies conducting forward-stock splits are aiming to make their shares more nominally affordable for retail investors and their employees. Meanwhile, businesses enacting reverse-stock splits are purposely increasing their share price, usually with the goal of maintaining minimum share price listing standards on a major stock exchange. Although some companies completing reverse-stock splits have gone on to be wildly successful, most reverse splits are enacted from a position of weakness. Comparatively, high-flying stocks that need to reduce their share price to make it more nominally affordable for investors and employees are typically out-executing their competition. This disparity is why most investors tend to gravitate to companies enacting forward-stock splits. Since 2024 began, in the neighborhood of a dozen top-tier businesses have announced stock splits. However, the outlooks for these stock-split stocks differ meaningfully. While AI juggernaut Nvidia (NVDA -2.61%) has shouldered the load in sending the major stock indexes to fresh record closing highs, it's my belief that two other stock-split stocks are positioned to absolutely crush Nvidia in the return column over the next three years. Nvidia's stock has risen by 765% between the start of 2023 and the closing bell on July 16, 2024, which translates into a gain of more than $2.7 trillion in market value. This outsized gain is what convinced the company's board to approve a historic 10-for-1 stock split on May 22. On paper, everything has gone Nvidia's way. The company's H100 graphics processing unit (GPU) offers clear compute advantages over what few other AI-GPU options are available. As a result, Nvidia was responsible for roughly 98% of the 3.85 million AI-GPUs shipped last year, according to TechInsights. Furthermore, demand for Nvidia's chips has overwhelmed its supply. This allowed Nvidia to rapidly increase the selling price of its chips, which drove its adjusted gross margin to a scorching 78.35% during the fiscal first quarter (ended April 28). Though things seem great on the surface, history, competition, and valuation are all headwinds that suggest Nvidia could struggle mightily in the coming years. The headwind I continually return to with Nvidia and artificial intelligence is that there hasn't been a single buzzy innovation, technology, or trend for 30 years that's escaped an early innings bubble. Investors consistently overestimate the adoption rate and utility of next-big-thing innovations, and I don't see AI bucking this trend. If the AI bubble bursts, no company is going to take it on the chin more than Nvidia. This is a company that can also be hurt by competition -- even if it maintains its GPU compute advantages. Stalwarts like Intel and Advanced Micro Devices are rolling out competing chips to the H100 in AI-accelerated data centers. Moreover, all four of Nvidia's top customers, which account for around 40% of its net sales, are developing in-house AI-GPUs. With demand swamping supply, Intel and AMD should have no trouble gaining market share in high-compute data centers. All the while, AI-GPU scarcity, and Nvidia's pricing power, will wane. The final trouble spot is Nvidia's valuation. Although its forward price-to-earnings (P/E) ratio isn't off the charts, its trailing 12-month (TTM) price-to-sales (P/S) ratio is on par with the peak TTM P/S ratios seen from the likes of Cisco Systems and Amazon prior to the bursting of the dot-com bubble. All signs point to Nvidia's stock struggling mightily over the next three years -- and the following two stock-split stocks leaving it in the dust. The first stock-split stock with the tools and intangibles needed to handily outperform Nvidia in the return column over the next three years is satellite radio operator Sirius XM Holdings (SIRI -1.59%). Sirius XM is the only high-profile stock split of 2024 that's of the reverse-split variety. When Sirius XM completes its merger with Liberty Media's Sirius XM tracking stock, Liberty Sirius XM Group, during the third quarter, a 1-for-10 reverse split will be conducted. What gives Sirius XM a high probability of outperforming Nvidia by the midpoint of 2027 is its abundance of competitive advantages. To start with, it's the only licensed satellite radio operator. While it still competes for listeners with terrestrial and online radio providers, being the only licensed satellite radio operator gives it meaningful subscription pricing power. More importantly, Sirius XM's operating model is markedly different than traditional radio providers'. Whereas online and terrestrial radio stations rely heavily on advertising to keep the lights on, Sirius XM brought in less than 19% of its $2.16 billion in first-quarter revenue from advertising (which traces back to its Pandora Media subsidiary). Advertising revenue can be prone to wild swings that are dependent on the health of the U.S. and global economy. Comparatively, Sirius XM generated almost 78% of its sales from subscriptions in the March-ended quarter. Subscribers are far less likely to cancel their service than advertisers are to pare back their spending during an economic downturn. In short, Sirius XM is better-positioned than its radio peers for whatever the U.S. economy throws its way. There's also a level of cost transparency with Sirius XM that won't be found with other radio operators. No matter how many subscribers Sirius XM adds over time, its transmission and equipment costs aren't going to vary much, if at all. Lastly, there's an undeniable value proposition with Sirius XM. Shares are valued at just 12 times forward-year earnings, which represents a 34% discount to its average forward-year earnings multiple over the trailing five-year period. The other stock-split stock with all the necessary catalysts to absolutely crush Nvidia in the return department over the next three years is Japan-based consumer electronics powerhouse Sony Group (SONY -0.40%). On May 14, the company's board announced plans to conduct a 5-for-1 forward-stock split. For the company's American Depositary Receipts (ADRs), the record date for this split is Sept. 30, with an effective date of Oct. 8. In other words, Sony's stock is still roughly two-and-a-half months away from becoming nominally cheaper. Sony is probably best-known for its gaming prowess, even though sales of its flagship PlayStation 5 have tapered a bit since its release in late 2020, during the height of the COVID-19 pandemic. The good news is that its gaming segment has two catalysts to look forward to through 2027. For starters, subscription revenue tied to PlayStation Plus has been climbing. PlayStation Plus is a multi-tiered service that gives subscribers the ability to game with their friends, and save their gaming data in the cloud. It's a high-margin service that's likely to keep subscribers loyal to the Sony brand. To add to this point, Sony's next-generation console is liable to come to market sometime between late 2026 and early 2028. Since next-gen console sales have historically been a key revenue driver for Sony, it wouldn't be a surprise to see shares reacting positively well before the debut of a new console. Beyond gaming, Sony Group is one of the top suppliers of image sensors used in smartphones. Wireless companies upgrading their networks to support 5G speeds have fueled a steady device replacement cycle that's lifted sales for the company's Imaging and Sensing Solutions (I&SS) segment. I&SS segment sales are forecast to grow by 15% this year. Sony Group's board also believes the company's shares are trading at a discount. On the same day its 5-for-1 forward split was announced, the board approved the repurchase of up to 30 million outstanding shares (on a post-split basis). For businesses with steady or growing net income, stock buybacks have a way of lifting earnings per share and making fundamentally sound companies look even more attractive.

Stock-Split Fever: 2 Recent Stock-Split Stocks and 1 That Could Be Next | The Motley Fool

Jake Lerch (Nvidia): There's no way to talk about stock-split mania without discussing Nvidia. Simply put, the stock market has gone gaga over Nvidia -- taking the company from a market cap of $280 billion to over $3 billion in just under two years. As a result of its skyrocketing stock price, Nvidia's board of directors authorized a 10-for-1 stock split in May of this year, bringing the company's stock price down from over $1,200 to around $120. That stock split, like all common stock splits, did not change any of the company's fundamentals. Similar to running a pizza cutter across a freshly baked pizza, a stock split simply divides what already exists into smaller, more manageable pieces; it doesn't create more pizza. Ultimately, investors need to pay attention to Nvidia's fundamentals -- now more than ever. To put it bluntly, the company's stock is nearing levels that should give investors pause. Take the stock's price-to-sales (P/S) ratio, for example. Nvidia stock has a lifetime P/S ratio of 8.4x. That's much higher than the average stock, which trades with a P/S ratio closer to 3x. However, within the tech industry, P/S ratios of 6 to 10 are common. Yet, what is truly concerning is that Nvidia's current P/S ratio isn't anywhere close to that range -- it's 37x. Accordingly, investors today are paying about 4 times above its long-term historical P/S average. So, even after Nvidia's enormous revenue growth (company revenue has nearly tripled from $25 billion to $70 billion over the last two years), much of the rise of Nvidia's stock is coming from investors paying higher prices. In short, investors are paying up for future growth and hoping that the company can meet -- or beat -- rising sales expectations. That's a risky proposition, meaning investors might want to look elsewhere for a better value. Will Healy (Broadcom): Broadcom just executed its first stock split. The technology giant has dramatically benefited from artificial intelligence (AI), and its stock has increased by more than 80% over the last year. Despite those gains, it is not necessarily too late to buy. Broadcom leverages AI in two ways. Its business-to-business chip solutions segment designs specialized semiconductors for its clients, and as such, it creates chips to support AI. Also, amid a growing enterprise software business, it can underpin a client's software needs. Those capabilities appeared to bolster its stock gains, particularly over the last year. That growth, in turn, likely prompted the 10-for-1 stock split it initiated on July 12. Still, investors should remember that Broadcom has been a growth stock throughout its history. The former Avago Technologies launched its IPO at a split-adjusted price of just $1.50 per share in 2009. During that time, the stock price grew by more than 100-fold. So massive was its growth that its dividend, now at $2.10 per share annually, is 40% higher than the original IPO price! Despite such increases, investors have to look past a critical financial metric. In the first six months of fiscal 2024 (ended May 5), net income of $3.4 billion dropped 53% yearly. That may deter investors, especially since that contributed to the P/E ratio rising to 69. Admittedly, the high P/E ratio makes it expensive, and the stock is likely not invulnerable to a downturn should market sentiment change. However, investors should keep in mind that revenue rose 39% yearly over the same period, and the company used some of the revenue increase to invest in itself when it increased operating expenses by 150%. Such actions could increase profits in the long term, taking the stock price higher over time. Additionally, the split could help as the lower nominal price makes whole shares more affordable, a factor that should add to its considerable long-term gains. Justin Pope (Microsoft): Tech giant Microsoft hasn't split its stock in recent memory, but that could soon change. The company frequently split during the 1990s until the infamous dot-com bubble popped in 2000. Shares plunged and took nearly two decades to recover. But Microsoft has now risen to levels few may have predicted. Technologies like cloud computing and artificial intelligence have continued to fuel non-stop growth over the past decade: Now, shares are much higher than they were years ago. Investors and employees sitting on massive investment returns from holding stock may not want to sell in $400 to $500 increments. A stock split would lower the share price and give them some flexibility. It would also make it easier for those buying stock to build a position without having a lot of money for big purchases. A potential stock split may become more sensible over time. Analysts believe Microsoft will grow earnings by an average of over 16% annually for the next three to five years. The stock trades at a forward P/E ratio of 34, which is reasonable considering Microsoft's anticipated growth. The bottom line? Shares are poised to climb higher on strong earnings growth over the coming years, so a split only makes sense. Investors should keep Microsoft on their radar as the next potential stock split.