4 artificial intelligence (AI) stock splits that could happen in 2025

Stock splits, which occur when a company splits its existing shares into more shares, effectively increasing the shares outstanding while maintaining the same market value, have been all the rage on Wall Street for the past few years, with companies such as Amazon, Nvidiaand Tesla join in the madness.

Although stock splits do not affect a company’s valuation, they can serve a purpose, including attracting more retail investors to buy stock at a reduced price, which in theory can help increase demand for the stock.

One sector, artificial intelligence (AI), which has seen rising share prices is ripe with stock split candidates, so let’s examine four and briefly discuss their long-term prospects.

1. AppLovin

AppLovin (APP 3.11%) provides technology and tools to help mobile app developers effectively market, monetize and develop their apps. The company uses AI to optimize ad placements and maximize revenue for developers.

As of this writing, AppLovin stock is trading at $332 per share, making its market cap around $112 billion. Notably, the company has never split its stock since it went public in 2021, but has risen more than 400% since then.

When you dig into the numbers, it’s easy to see why the stock has risen. In the third quarter of 2024, AppLovin generated $1.2 billion in revenue, which equates to $545 billion in free cash flow, up 39% and 182% year-over-year, respectively. As a result of the strong quarter, management announced a $2 billion increase to its share repurchase program, which now stands at $2.3 billion. Over the past three years, AppLovin’s outstanding share count has decreased by 11%, demonstrating management’s commitment to increasing existing shareholders’ ownership.

2. ASML Holding

ASML Holding (ASML 0.81%) manufactures advanced photolithography machines critical to producing high-performance microchips used in AI technologies, while leveraging AI to optimize its own operations. The stock, currently trading at $750 per stock and a market capitalization of $304 billion, has undergone four stock splits since its initial public offering (IPO) in 1997.

The first three stock splits in ASML’s history were forward splits, but its most recent split in 2007 was an 8-for-9 reverse split. As a result, an investor who bought one share at ASML’s IPO in 1997 would own 10.67 shares today.

As for ASML’s latest results, the company had $8.2 billion in revenue and $2.3 billion in net income during Q3 2024, representing an increase of 13.1% and 10.7%, respectively. Additionally, the company has a strong balance sheet with $326.5 million in net cash, allowing management to comfortably pay a consistent dividend since 2013. The company pays quarterly dividends in euros, so it can fluctuate for US investors based on the exchange rate, with the recent dividend totaling $1.64. Nevertheless, ASML has a relatively low payout ratio of 35.2%, which management has announced it intends to grow over time.

3. Metaplatforms

Meta platforms (META 0.24%)formerly Facebook, has never split its stock since its IPO in 2012. Over the past year, the stock is up more than 60% and trades at $615 a share. stock with a market capitalization of nearly $1.6 trillion.

Meta, best known as a social media company driven by advertising revenue, has leveraged AI to improve its services. According to the company, its AI tools allow advertisers to create more effective campaigns. For example, companies that used their image generation technology saw a 7% boost in conversions.

In its most recent quarter, Meta had $40.6 billion in revenue and $15.7 billion in net income, reflecting year-over-year growth of 19% and 35%, respectively. With $42.1 billion in net cash, the company has increasingly focused on returning capital to shareholders. In 2024, Meta initiated its first quarterly dividend of $0.50 per share, yielding 0.32%, and it has reduced its shares outstanding by 7.3% over the past three years.

Looking ahead, Meta plans to invest heavily in artificial intelligence. Management expects capital spending to exceed $40 billion by 2025, underscoring the central role of AI in the company’s growth strategy.

4. Microsoft

Microsoft (MSFT 1.05%) rounds out this list as the company with the largest investment in AI. Over the past 12 months, it has spent $49.5 billion on capital expenditures and has invested an estimated $13.8 billion in OpenAI since 2019. CEO Satya Nadella says AI is driving a “fundamental change in the business application market as as customers transition from legacy apps to AI-first business processes.”

Since going public in 1986, Microsoft has split its stock nine times, with the most recent 2-for-1 split occurring in 2003. A single share purchased at the IPO would now represent 288 shares.

In its most recent quarter, Microsoft reported $65.6 billion in revenue and $24.7 billion in net income, reflecting year-over-year growth of 16% and 10.7%, respectively. The company boasts a robust balance sheet with $33.3 billion in net cash, supporting 20 consecutive years of dividend increases. Microsoft currently pays a quarterly dividend of $0.83, yielding 0.78% annually.

Are these potential stock split candidates worth buying?

It’s worth noting that none of these four market-beating stocks have announced a stock split. Although the prospect of a split can create excitement, it is rarely a compelling reason to invest.

Long-term stock success depends on a company’s financial performance, particularly its ability to achieve sustained growth in revenue and profits. These companies have already demonstrated how AI creates significant gains in both, making them excellent choices for any long-term investor’s portfolio.