When a company creates a substantial amount of value over the long run, its stock price can soar into the hundreds or even thousands of dollars, which makes it hard for smaller investors to buy (unless they use a broker that offers fractional shares). As a result, the company might opt for a stock split, which increases the number of shares in circulation and organically reduces its price per share by a proportional amount.

It's important to remember that the move is entirely cosmetic, and it doesn't change the underlying value of the company. However, splits often result in a short-term uptick in stock price as a broader investor base swoops in to buy.

Nvidia executed a 10-for-1 split in June, when its stock soared above $1,200 following an incredible run of value creation on the back of artificial intelligence (AI). Now, investors can buy one share of Nvidia for just $126. A long list of other tech giants have used stock splits in the past, including , Apple, Amazon, and Tesla, to name a few.

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Source Fool.com