In recent months, a number of artificial intelligence (AI) technology companies have announced stock splits. In fact, of the five potential AI stock splits I wrote about in May, four have either already taken place or announced they will soon follow.

Remember that a stock split does not change the intrinsic value of a stock in the slightest. But it can make the stock accessible to more retail investors and/or employees who want to buy shares for smaller amounts and do not have access to purchasing fractional shares.

With stock split fever in the air and the Nasdaq After the late July slump, even more AI-related stocks are experiencing a rapid price increase. With a high share price and the likelihood of further AI-driven growth, these three are the next candidates for a stock split in the near to medium term.

Meta-platforms

One could not think Meta-platforms (META -0.48%) as a leader in AI, but don’t underestimate CEO Mark Zuckerberg and his management team: Meta actually has the potential to beat current market leaders like OpenAI and others at their own game.

Meta obviously has the financial means to invest in leading AI infrastructure, but its competitive advantage may lie in Zuckerberg’s decision to open source the code of the company’s Llama model. Open source essentially means giving away the code for free, but that allows outside developers to tweak and improve the underlying model. This decision has the potential to increase Llama’s innovation power faster than closed-source competitors like OpenAI or the models of other Magnificent Seven stocks.

Meta can afford this because selling direct access to its AI large language model is not its core business. Rather, all of its major social media platforms benefit from the increased power of AI, which has been proven to increase user engagement and better target ads, leading to higher revenue per ad.

This was evident in the second quarter. Despite Meta’s enormous size, the company was able to increase its daily active users by 7% while also increasing revenue by 22% and operating profit by a whopping 58%.

Of course, Llama should become a revenue generator one day, as Zuckerberg has identified potential future use cases, such as agents that automate many tasks for developers, insert ads into AI interactions, or potentially directly charge for higher, more advanced levels of AI modeling and computation. But for now, Meta can afford to take its time and develop these services.

Meta is currently the only stock in the Magnificent Seven that has never done a stock split. But with the stock price already above $525 per share and a very reasonable valuation of 26 times earnings, it’s not far-fetched that a stock split could happen in the near future. After all, Meta already had another first this year, as the company paid a dividend for the first time in February.

KLA Corporation

KLA Corporation (KLAC -1.08%) has seen its share price rise in anticipation of a boom in artificial intelligence investment. As a leading provider of process control equipment that helps chipmakers inspect chip wafers for defects at multiple steps in the chip manufacturing process, KLA appears poised for growth as cutting-edge AI chips and memories become increasingly complex.

KLA has a dominant market share in the metrology and inspection space, with share as high as 55% in some industries. This market dominance in a key semiconductor process enables high margins and free cash flow. The company’s operating margin was a whopping 41% last quarter.

These AI stocks could soon split their shares. Image source: Getty Images.

KLA’s excellent combination of growth and profitability is why the company has increased its dividend by 15% annually since 2006. And it’s also why the stock price has risen to $820 per share and the company is now ripe for a stock split.

Competitor for capital goods in the semiconductor sector Lam Research announced a stock split in May that will take effect in October. Today, Lam’s shares trade at about the same price as KLA’s. Like KLA, Lam masters a certain part of the chipmaking process, but a different step in etching and deposition. So the two are not really competitors, but have similarly high profit margins due to a lack of competition. Given their similar characteristics and the chip industry seemingly on the verge of an upswing, it’s not inconceivable that KLA Corporation could announce a split in the near future.

Arista Networks

At $350 per share Arista Networks (ANET 0.49%) There may not be a 1:10 stock split, as some of its technology competitors have done recently, but there could be a 1:2 or 1:3 split.

Arista was a disruptor at the dawn of the cloud computing era. Its novel network switch architecture consisted of data center switches made from best-in-class third-party hardware, which reduced internal costs. Arista’s EOS software is the glue between everything, enabling high performance, system intelligence, and blazing-fast speeds at a lower cost than traditional switches.

Arista’s focus on software and its enormous size enable very high margins. In the last quarter, Arista’s revenue grew by 15.9% and the operating margin reached over 41% over the last 12 months, with an admirable return on equity of 34.5%. These are top-notch levels of profitability and solid growth.

Artificial intelligence requires efficient switching and routing like traditional data centers, but on a larger and more complex scale. Arista is a natural beneficiary of this theme. But earlier this year, some were concerned that internal network solutions from NVIDIAbased on Infiniband technology, could become a competitive threat.

But Ethernet-based company Arista seems to have overcome those expectations with its recent results. In fact, in its recent earnings release, Arista even unveiled a new holistic AI data center solution in collaboration with Nvidia, showing that the leading AI chipmaker continues to value its collaboration with Arista and its leading Ethernet-based solutions.

Arista will continue to innovate its EOS software and switching architecture for super-large AI clusters. Arista has a bright future and is expected to continue riding the AI ​​wave, and there may also be a stock split.