Anticipated Split Opportunities in Artificial Intelligence (AI) Shares for Investors, Projected for 2025
High-performing corporations often create substantial worth, occasionally pushing their share price into multiples of hundreds (or thousands) of dollars. This might make it costly for small investors to purchase shares at such a high point (unless they use a broker offering fractional shares), leaving institutional investors and large funds with a majority stake.
Stock splits can alleviate this issue by increasing the number of shares available while simultaneously decreasing the price per share. Stock splits do not alter the company's inherent value but make the stock more affordable for smaller individual investors.
Stock splits gained popularity in 2024
Several notable companies carried out stock splits during this year:
- *Nvidia* performed a 10-for-1 stock split on June 10, expanding the number of shares in circulation by tenfold and reducing its share price from $1,200 to $120.
- Chipotle conducted a 50-for-1 stock split on June 26, reducing its share price from $3,283 to $66.
- Broadcom executed a 10-for-1 stock split on July 12, reducing its share price from $1,700 to $170.
The new year is approaching, which has some analysts speculating on which businesses might carry out stock splits in 2025. I believe Microsoft (MSFT -0.51%) and Meta Platforms (META -1.65%) might find themselves on that list. Out of the six technology companies with valuations of $1 trillion or more, those two have the highest share prices.
Their prices might increase even further as they expand into the artificial intelligence (AI) sector. Here's why they could benefit from a split.
1. Microsoft: A possible 3-for-1 stock split in 2025
Microsoft has completed nine splits since its stock debut in 1986. The company has generated a remarkable $3 trillion in value for investors over the past 38 years, and if it had not carried out any splits, its stock would be trading at $119,500 today!
Microsoft's most recent split occurred more than two decades ago in 2003. The company's share price is currently $415, so it might be overdue for another split -- especially considering the potential value the company could create due to its investments in AI.
Microsoft is an investor in ChatGPT creator OpenAI and has used the startup's technology to create the Copilot virtual assistant, which is integrated for free into its flagship software products like Windows, Bing, and Edge. However, users of 365 productivity applications -- like Word, Excel, and PowerPoint -- can also add Copilot to their plans for an additional monthly subscription fee.
Copilot can expedite 365 workflows by swiftly generating text and image content and answering complex questions on various topics. Organizations worldwide pay for 365 software licenses (more than 400 million currently), making all of them potential candidates for the Copilot add-on, presenting a significant financial opportunity for Microsoft.
Then there's Microsoft Azure, which is one of the biggest providers of cloud services in the world. It's the go-to destination for developers seeking advanced computing infrastructure and pre-made large language models (LLMs), such as OpenAI's latest o1 series, which are essential components for creating powerful AI software applications.
Azure revenue increased by 33% year over year during the recent fiscal 2025 first quarter ending September 30, and 12 percentage points of that growth specifically came from AI services. This was up from 8 points in the prior quarter only three months earlier, and the figure has accelerated in every single quarter since Microsoft began reporting it over a year ago. This business could be a significant source of stock-price appreciation in the years ahead.
If Microsoft enacts a 3-for-1 split, its share price will drop to $138 per share, making it more affordable for smaller investors. It would also position it alongside other trillion-dollar tech giants such as Nvidia, Amazon, Alphabet, and Apple, which have share prices ranging between $100 and $250.
2. Meta Platforms: A possible 10-for-1 stock split in 2025
Meta Platforms has never conducted a stock split, but I believe there could be one soon. The company went public in 2012 at a price of $38 per share but has skyrocketed to $554 since then, holding the highest price tag of any tech stock in the trillion-dollar club.
Meta is the parent company of social networks Facebook, Instagram, and WhatsApp, which collectively serve almost 3.3 billion people worldwide every day. The company generates most of its revenue from selling advertising slots to businesses, so the more time each user spends on its platforms, the more ads they will see, and the more revenue Meta will generate.
The company is increasing engagement by utilizing AI algorithms to discern what each user likes to see, allowing it to curate their content feeds to maintain their attention. Meta CEO Mark Zuckerberg has stated that this strategy led to an 8% increase in the amount of time each user spends on Facebook this year and a 6% increase for Instagram.
Introducing fresh functionalities stimulates engagement levels. Meta debuted an AI-driven digital helper, referred to as Meta AI, last year. This innovation can be convened across every one of the company's social platforms. It's capable of producing text and visuals, and can even hop into group chats to resolve disagreements among pals or suggest engaging pastimes. By the third quarter of 2024 (Sept. 30), Meta AI had registered around 500 million monthly active users. Thus, it's edging closer to becoming one of the firm's most sought-after offerings.
Meta AI is fuelled by Llama, a personalized LLM developed by Meta internally. Meta has earmarked up to $40 billion for data center infrastructure investment this year, generating sufficient processing power to introduce Llama 4 in 2025. This will be Meta's most advanced LLM, as per Zuckerberg's assertions, with the potential to spearhead the entire industry.
Meta's stocks current trades at a forward price-to-earnings (P/E) ratio of 21.9, based on Wall Street's projection for Meta's 2025 earnings per share. This signifies that the stocks must ascend by approximately 71% in the coming year to trade at its 10-year average P/E ratio of 37.5, which translates to a stock price of $947.
In my opinion, Meta could ponder over a split right now, while a 10-for-1 split might be a straightforward option if the stock reaches the four-figure mark in the next year.
After the success of stock splits in 2024 by companies like Nvidia, Chipotle, and Broadcom, some analysts are anticipating potential stock splits for Microsoft and Meta Platforms in 2025. Microsoft, with a high share price of $415, might consider a 3-for-1 split, making its shares more affordable and aligning its price with other tech giants. On the other hand, Meta Platforms, which has never conducted a stock split, may consider it due to its high share price of $554 and potential for further growth in the AI sector.
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