One of the more interesting developments in the investment world in recent years has been the resurgence of stock splits. The once common practice had waned in popularity but has seen a renaissance in recent years. Companies will typically go this route after years of strong performance make their stock price less accessible to ordinary investors. A stock split allows more shares to trade at a lower price; it does not change a company’s market capitalization.

Newton’s first law of motion states that an object in motion tends to stay in motion unless acted upon by an external force. That same principle could easily be applied to investing in successful companies. Those who implement stock splits see their stock prices rise an average of 25% in the year following the announcement, compared to 12% gains for those who S&P 500according to data collected by Bank of America analyst Jared Woodard.

Below are three stocks that have split and could have upside potential of as much as 148%, according to some Wall Street analysts.

Nvidia: Implied increase 62%

The most celebrated stock split in recent history is probably Nvidia (NASDAQ: NVDA)And the chipmaker still has a boatload of potential. It’s the leading supplier of graphics processing units (GPUs), which are used to push data through the air for data centers, cloud computing and artificial intelligence (AI). That business has overshadowed its humble roots by generating lifelike graphics in video games.

For the first quarter of its fiscal 2025 year-end (ended April 28), Nvidia generated record revenue that increased 262% year over year to $26 billion, resulting in diluted earnings per share (EPS) that rose 629% to $5.98. The results were led by data center revenue – which includes cloud and AI chips – as revenue for the segment rose 427% to $22.6 billion. That marked the fourth consecutive quarter of triple-digit revenue and profit growth.

It’s no wonder that results of that magnitude have boosted Nvidia’s stock price, which has soared nearly 800% since the start of 2023, culminating in the eye-catching 10-for-1 stock split in June. Some on Wall Street, however, believe this is just the tip of the iceberg. Rosenblatt analyst Hans Mosesmann maintains a buy rating on Nvidia and a Street-high price target of $200, representing a potential upside of 62% from Thursday’s close.

The analyst cites Nvidia’s accelerated development cycle and track record of innovation as evidence that there’s more upside to come. “We see Nvidia’s Hopper, Blackwell and Rubin series driving ‘value’ market share in one of Silicon Valley’s most successful silicon/platform product cycles,” Mosesmann wrote in a note to clients.

The story continues

He’s not alone in his optimistic outlook. Of the 59 analysts who gave an opinion in July, 54 rated the stock a buy or strong buy, and no recommended sales.

I think the analyst hit the nail on the head. Nvidia’s customers have reported that they are increasing their capital expenditures for AI, which directly benefits Nvidia. Furthermore, partners have reported optimistic results, suggesting that the AI ​​revolution is underway. To me, this is compelling evidence that Nvidia stock has even more to go.

MicroStrategy: Implied Upside 61%

The second stock split stock with significant upside potential is MicroStrategy (NASDAQ: MSTR)which split its shares earlier this month. The company provides subscription-based AI-driven business analytics software that enables non-technical users to gain actionable insights from their data. MicroStrategy also provides cloud-based services to government agencies.

What sets the company apart, however, is its Bitcoin strategy that really grabs attention. MicroStrategy calls itself “the largest corporate holder of Bitcoin and the world’s first Bitcoin development company.”

For the second quarter, subscription revenue rose 21% year-over-year, though total revenue fell 7% and operating losses widened more than sevenfold. MicroStrategy made much more progress on the Bitcoin front, however, increasing its holdings to 226,500 Bitcoins, worth more than $13 billion at the time of writing, well above its $8.3 billion cost.

Despite the company’s risky strategy, some on Wall Street remain bullish. Benchmark analyst Mark Palmer has a buy rating on MicroStrategy, with a split-adjusted, Street-high price target of $215. That represents a potential upside of 61% from Thursday’s close. The analyst says that while the company has its detractors, MicroStrategy’s stock has risen nearly 1,000% since it implemented its Bitcoin strategy four years ago, far outpacing Bitcoin’s own returns of 413%. That undoubtedly played a role in the company’s 10-for-1 stock split earlier this month.

Wall Street clearly agrees. Of the seven analysts who covered the stock in July, all rated it a buy or strong buy, and none recommended selling.

For investors who believe that Bitcoin will hold its value and continue to gain ground over time, MicroStrategy’s strategy is nothing short of brilliant. However, it’s important to remember that Bitcoin lost a whopping 75% of its value by the end of 2022. An investment in MicroStrategy could be just as volatile.

I believe MicroStrategy offers an attractive opportunity for investors with a taste for some volatility and a long investment horizon. That said, I also believe there is some risk involved and that MicroStrategy should represent a small portion of a balanced portfolio.

Super Micro Computer: Implied Up 148%

The last of my trio of stocks with a stock split and a boatload of potential is Supermicrocomputer (NASDAQ: SMCI)also known as Supermicro. The company is one of the industry’s leading suppliers of custom servers, backed by more than three decades of experience.

Supermicro made the leap into the big leagues thanks to robust demand from those looking to join the AI ​​revolution. However, it was the company’s building block architecture, energy efficiency, and direct liquid cooling that drove demand for its rack-scale servers, as the devices could be customized to user needs while still offering energy efficiency and withstanding the heavy workloads required to run AI models.

In the fourth quarter of fiscal 2024 (ended June 30), Supermicro reported record revenue that increased 143% year-over-year to $5.3 billion, up 38% quarter-over-quarter. This generated adjusted earnings per share (EPS) that increased 78% to $6.25, marking the company’s third consecutive quarter of triple-digit gains.

Supermicro’s continued strong growth has sent its stock price into the stratosphere, with a gain of 637% since the beginning of last year. This likely played a role in the company’s decision to announce a 10-for-1 stock split earlier this month.

Wall Street believes there is more upside to come. Loop Capital analyst Ananda Baruah is one of the biggest bulls, with a buy rating on the stock and a Street high price target of $1,500. That represents potential gains for investors of 148% compared to Thursday’s close.

The analyst believes Supermicro has much greater sales potential than Wall Street gives it credit for, estimating that revenue will reach $40 billion by the end of fiscal 2026. By comparison, Supermicro generated less than $15 billion in revenue in fiscal 2024. The analyst’s forecast also closely matches management’s forecast, which calls for net revenue of about $28 billion for fiscal 2025.

Wall Street seems to agree. Of the 17 analysts who covered the stock in July, 11 rated it a buy or strong buy, and none recommended selling.

I fully support this analyst’s opinion. The company continues to take market share from its larger rivals, accelerates its growth further and has a pole position in the AI ​​revolution.

Should You Invest $1,000 in Nvidia Now?

Before you buy Nvidia stock, here are some things to consider:

The Motley Fool Stock Advisor team of analysts has just identified what they think is the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could deliver monster returns in the years to come.

Think about when Nvidia made this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $758,227!*

Stock Advisor offers investors an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates, and two new stock picks each month. The Stock Advisor has service more than quadrupled the return of the S&P 500 since 2002*.

View the 10 stocks »

*Stock Advisor returns as of August 22, 2024

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Danny Vena has positions in Bitcoin, Nvidia, and Super Micro Computer. The Motley Fool has positions in and recommends Bank of America, Bitcoin, and Nvidia. The Motley Fool has a disclosure policy.

3 Stocks You Need to Buy Before They Soar 148%, According to Select Wall Street Analysts was originally published by The Motley Fool