The stock market rally on Wall Street shows no signs of slowing down as the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite recently hit new milestones. While various factors have contributed to this growth, stock splits have played a significant role in generating excitement among investors. Today, Dec.
16, marks the last stock split of 2024 from a seemingly unstoppable company: Palo Alto Networks. The AI-driven cybersecurity leader has experienced a meteoric rise of 2,150% since its IPO and announced a 2-for-1 forward split on Nov. 20.
This is the company’s second stock split since going public, following a 3-for-1 forward split in September 2022. Palo Alto Networks has thrived by capitalizing on the growing need for cybersecurity as more businesses move their data to the cloud. The company’s focus on AI-driven next-generation security platforms and subscription-based services has led to higher margins and greater customer loyalty.
By the end of October, Palo Alto Networks had 305 customers generating at least $1 million in annual recurring revenue, with approximately 20% of these customers bringing in over $5 million. If the company continues to execute its strategy successfully, another stock split could be on the horizon within the next five years or even sooner.
Palo Alto Networks announces stock split
In other news, a select group of S&P 500 companies are aggressively buying back their own shares despite broader market concerns. Data from S&P Dow Jones Indices reveals that ten companies each spent more than $3.5 billion on share repurchases in the third quarter of 2024, up 42.9% from the previous year. Notable examples include Apple, which spent $25.4 billion on buybacks, and Alphabet, which invested $15.3 billion.
AI leader Nvidia also committed heavily to buybacks, spending $12.7 billion in the third quarter, a 176% increase from the previous year. While these buybacks often aim to offset share dilution from employee stock awards, the timing and scale suggest confidence in these corporations’ future prospects. However, it is important to note that companies do not always time the market perfectly with their buybacks.
Looking ahead, experts like Jimmy Lee, CEO of Wealth Consulting Group, expect the stock market rally to continue throughout 2025. Despite concerns over valuations in the AI sector and uncertainty surrounding interest rate cuts, there is optimism for the coming year. Global market influences, such as President Trump’s SEC pick and South Korea’s ongoing crisis, are also expected to impact the market.
Additionally, the incoming administration and labor data suggesting no immediate interest rate cuts have affected overall market sentiment. In conclusion, while external and internal factors continue to influence the market, the Nasdaq rally is expected to persist into 2025, driven by strong performances from companies like Palo Alto Networks and the ongoing commitment to stock buybacks by select S&P 500 companies.
