Stock splits are often seen as a reflection of confidence in a company’s growth trajectory.
They typically follow significant rises in a company’s stock price, attracting investor attention and creating positive momentum. This week, two major tech players, Super Micro Computer (NASDAQ: SMCI) and Lam Research (NASDAQ: LRCX), are set to undergo stock splits, sparking interest from analysts who are weighing in on which might be the better investment opportunity.
Super Micro Computer, known for its advanced computer hardware and AI-capable servers, is scheduled for a 10-to-1 stock split on October 1, 2024. The move follows a surge in demand for the company’s high-performance computing products, particularly as the AI sector continues to expand. Despite a strong year-over-year revenue increase of 143% in the latest quarter, the company has faced recent headwinds, including allegations of accounting irregularities by Hindenburg Research and a delayed regulatory filing. JPMorgan analyst Samik Chatterjee has recommended caution, noting regulatory uncertainty. However, Chatterjee still sees potential for a 21% upside over the next year, though he advises investors to wait until the company addresses its challenges.
On the other hand, Lam Research, a key player in the semiconductor industry, is also planning a 10-to-1 stock split effective October 2, 2024. Lam, which provides equipment used in the manufacturing of silicon microchips, has remained strong despite fluctuations in the memory chip sector. With positive quarterly earnings and cash flow, analysts like Brian Chin of Stifel Nicolaus remain optimistic about Lam’s future, particularly with anticipated growth in the semiconductor space. Chin projects a 27% upside for Lam’s stock, citing a recovery in NAND chip spending as a potential catalyst.
Both companies have their strengths, but analysts appear to be more bullish on Lam Research due to its solid financials and the overall resilience of the semiconductor industry.
With input from Yahoo Finance, Tip Ranks, and Investing.com.
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