Major Market Shift: The Rise of Stock Splits and AI-Powered Growth
For nearly two years, artificial intelligence has driven Wall Street’s major indexes upward, but a new trend has emerged: stock splits. Since January, over a dozen prominent companies have announced or completed stock splits, making their shares more affordable for retail investors. Today, Sony Group joins the list, with its 5-for-1 forward split set to take effect.
Sony, a consumer electronics giant, is best known for its gaming prowess, with the PlayStation 5 being the top-selling ninth-generation console. The company’s decision to increase the console’s price by 19% in Japan demonstrates its commanding position in the gaming arena. Additionally, revenue from its PlayStation Plus subscription service has been climbing, providing a higher-margin segment to counter the staleness of the PS5.
However, Sony is more than just gaming. Its Imaging and Sensing Solutions segment is growing by double digits, driven by strong demand for image sensors used in smartphones. The company also has a shareholder-friendly capital-return program, having repurchased 14.67 million shares of its common stock for approximately $131.5 million.
The question on everyone’s mind is: which company will be the next to follow in Sony’s footsteps? Several companies, including Costco Wholesale, Adobe, and Eli Lilly, appear ripe for a stock split. However, social media leader Meta Platforms may be the likeliest to announce a split. With its shares topping $600, making its stock more affordable for everyday investors could be a strategic move.
Meta, the parent company of Facebook, WhatsApp, Instagram, and Facebook Messenger, among other sites, attracts 3.27 billion daily active users. This massive user base gives the company exceptional ad-pricing power. Moreover, Meta is aggressively investing in AI ambitions and building its metaverse vision, positioning itself for sustained double-digit growth potential. With a cash-rich balance sheet, Meta has the luxury of taking risks and may be primed to become Wall Street’s next stock-split stock.
Leave a Reply