Will Nvidia's $3T valuation impact it's 10-for-1 stock split ?

Nvidia (NVDA) has surpassed the $3 trillion mark in market capitalization. This significant milestone comes just ahead of the company's planned 10-for-1 stock split on Friday. Yahoo Finance's Brad Smith breaks down the details, providing insights into what this stock split means for investors as Nvidia achieves this remarkable valuation.

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This post was written by Angel Smith

Video transcript

We gotta start with NVIDIA.

NVIDIA reached a record milestone here, crossing a $3 trillion market cap for the first time ever on June 5th.

The stocks advanced pushed NVIDIA past Apple, moving it into position as the second most valuable publicly traded US company here.

And it comes ahead of NVIDIA's 10 for one stock split, right folks, shares of NVIDIA.

They're about to get a little bit more affordable for the average investor out there.

If you own a share of NVIDIA ahead of tomorrow's market close on Monday, you will see that one share turn into 10 shares in your portfolio, and the share price will be divided by 10.

This will not change the company's $3 trillion valuation, but it will change two basic things.

One the number of shares current shareholders own.

So each shareholder of NVIDIA as of market close today, Thursday, June 6th, will receive nine additional shares distributed after the market closed on Friday.

So if you own one share, then you'll have 10.

If you own 10 shares, yes, you guessed it, you'll have 100.

So the second thing here, though, to remember the stock split, changes the dollar amount that you pay for every new share.

On Monday, NVIDIA closed at $1224.40 on Wednesday.

If the stock split had been effective, then each share would then be worth 1/10 of that, or 100 and $22.44.

Stock splits don't always generate positive results for every company, but in aggregate stocks that split, they tend to outpace the S and P 500 over the 12 months following the effective split, based on data from Bank of America.