Some of the hottest artificial intelligence (AI) companies on the market – including NVIDIA, BroadcomAnd Super-microcomputer — all have split their stocks or announced plans to do so in the past year. These events haven’t really made their high-flying stocks fundamentally cheaper, since they simply split their existing shares into smaller chunks, but they still attracted a lot of attention from retail investors who wanted to buy whole lots (100 shares) of a stock rather than just a few. They have also made it easier to trade options, since a single contract is tied to a single lot, and for companies to pay their employees with more flexible stock-based compensation plans.

So for long-term investors, stock splits aren’t that important because they don’t change the company’s business model or valuation. But stock splits are still usually a sign of a well-run company – because its stock price has risen so much that it needs to be cut. ASML (ASML -1.84%) And Meta-platforms (META 1.60%) are two AI-driven companies that fit this description and could be ripe for a breakup.

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ASML

ASML is the world’s largest manufacturer of lithography systems for optically etching circuit patterns on silicon wafers. It is also the only manufacturer of high-end extreme ultraviolet (EUV) systems for producing the world’s smallest and densest chips. The Dutch company’s share price has almost quadrupled in the last five years as leading chip foundries – including Semiconductor manufacturing in TaiwanSamsung and Intel – struggled to stay in the “process race” to produce more advanced chips.

ASML stock currently trades at around $840, but it’s been years since the last stock split. There were three stock splits during the dot-com bubble, and there was a reverse stock split in 2007. But another stock split could bring new attention to ASML – the company is often overshadowed by better-known stocks like Nvidia.

From 2020 to 2023, ASML’s revenue grew at a compound annual growth rate (CAGR) of 25%. From 2023 to 2026, analysts expect revenue and earnings per share (EPS) to rise at a CAGR of 13% and 21%, respectively, as the company grapples with tighter restrictions on its exports to China. However, the expansion of the AI ​​market could offset much of this pressure.

With a price-to-earnings ratio of 25 times next year’s earnings, ASML stock is not expensive, and the company’s monopoly position in a critical chipmaking technology makes it one of the easiest ways to profit from the long-term growth of the semiconductor and AI markets.

Meta-platforms

Meta Platforms, the parent company of Facebook, Instagram, Messenger and WhatsApp, uses AI to analyze its user data and create targeted advertising. The company is also developing its own AI accelerator chips to gradually curb its dependence on Nvidia’s chips. Last quarter, the company had 3.27 billion daily active users using its four main apps.

Meta has had to overcome some tough macroeconomic, competitive and platform challenges (mainly from Apples iOS update in 2021), but it still grew its revenue from 2020 to 2023 at a compound annual growth rate of 16%. It rebounded by attracting Chinese advertisers, expanding Reels to counter TikTok, and strengthening its first-party data collection tools to counter Apple’s privacy-focused changes.

From 2023 to 2026, analysts expect Meta’s revenue and earnings per share to grow at a compound annual growth rate of 15% and 23%, respectively, even as the company expands its unprofitable Reality Labs segment to make more augmented reality (AR) and virtual reality (VR) products. Those are robust growth rates for a stock that trades at 22 times this year’s earnings.

Meta stock trades for just under $480, but is the only one of the Magnificent Seven that has never done a stock split. A stock split could add some fresh momentum to this social media titan, which still appears undervalued relative to its growth.