Broadcom’s stock split is happening today. Here’s what it means for you.

As of today’s trading close, Broadcom (NASDAQ: AVGO) will cut its soaring stock price. The tech giant will conduct a 10-for-1 stock split, lowering its share price from more than $1,700 to about $170. The stock will begin trading at the new price when the market opens Monday.

Broadcom shares have soared nearly 100% over the past year, driven by growing customer demand for artificial intelligence (AI): In the most recent quarter alone, AI revenue jumped 280% to $3.1 billion. Investors also praised Broadcom’s acquisition of cloud software company VMware as a key growth driver during the quarter.

Broadcom’s deal today doesn’t erase the stock’s fantastic past performance — it simply lowers the price of each individual share by issuing more shares to current holders. And this purely mechanical deal doesn’t change anything fundamental about the company like valuation or market value. But it’s not exactly a non-event, either. Here’s what Broadcom’s deal means for the stock and for you.

Nine new actions

If you’re already a Broadcom shareholder, you’ll receive nine new shares for every share you already own after the market closes today. This doesn’t change the total value of your stake, but it could make it easier for you to add to or reduce your position in the tech giant.

For example, if you have a budget of a few hundred dollars, you can now buy a full share of Broadcom instead of going to fractional shares. And if you only held one or two shares before the split, you will now hold a total of 10 or 20. So if you want to reduce your holding, you can do so without selling your entire position.

If you’re not already a Broadcom shareholder and are considering investing a few thousand dollars in the stock, today’s deal won’t change anything for you. But if you’re considering investing a few hundred dollars in the company, a stock split will make it easier to buy. That’s because with that amount of money, you’ll be able to buy whole shares instead of fractions. Fractional shares are great, but some brokerages don’t offer them.

So the stock split makes it easier for some investors to trade Broadcom stock, which is a positive. It might even encourage more investors to pick up the stock — but that doesn’t happen overnight, and the investment decision is usually based on fundamentals like the company’s earnings and outlook.

Broadcom’s Vision for the Future

Broadcom’s decision to split its shares also signals the company’s confidence in its future. The idea is that with this new lower price, the stock has the means to rise again. And companies that decide to split their shares have typically done well: Earnings growth has often driven up the share price over time. That means it’s worth revisiting stocks that are splitting to see if they still represent solid long-term investment opportunities and would be a good addition to your portfolio.

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