Investors are attracted to stock splits, often viewing lower prices from top companies as a bargain. While this can be misleading, stock splits usually signal a strong company behind the high price.

Super Micro Computer (SMCI -0.92%) and Chipotle Mexican Grill (CMG 1.17%) are two notable companies that have benefited from stock splits. Should you invest in them now?

Super Micro Computer: Is it Still a Good Investment After the Split?

Keith Noonan: Super Micro has become a key player in the AI sector. Its sales have soared due to increased demand for its high-performance servers. However, some investors doubt this growth will last, especially after the company delayed its important 10-K filing following a negative report from a short-seller.

After a 10-for-1 stock split on Oct. 1, Super Micro’s stock has risen about 15%, but it’s still down 60% from its March peak. Bears argue that the company’s business model relies on standard parts, which may threaten profit margins as competition increases.

To stand out, Super Micro is focusing on its liquid-cooling technology for servers, and news of shipping over 100,000 GPUs with this feature has driven its post-split growth. Currently, the stock is valued at just 14 times this year’s expected earnings. Overall, risk-tolerant investors might find potential in Super Micro as the AI investment cycle continues.

Chipotle Mexican Grill: A Stock with a 6,460% Increase

Jennifer Saibil: Chipotle is a dominant force in fast-casual dining and has shown strong growth even during challenging times like the pandemic and inflation.

Chipotle’s fresh and affordable menu attracts its target market. In Q2 2024, sales jumped 18.2% year-over-year, and they executed a significant 50-for-1 stock split in June due to soaring stock prices.

Despite recent news of CEO Brian Niccol leaving for Starbucks and CFO Jack Hartung retiring, Chipotle aims to grow its North American store count significantly and is expanding internationally as well.

Chipotle has proven success and ample growth opportunities, making it a viable investment option.