Investors often favor stock splits, as a lower price can make shares seem like a bargain. Although this is somewhat deceptive—it’s essentially the same value divided into smaller parts—stock splits can signal a strong company. When a stock price rises too high, it indicates strong market confidence in the underlying company.

Super Micro Computer (SMCI -0.86%) and Chipotle Mexican Grill (CMG 1.07%) are two notable stocks that have split and created wealth for investors. Is it still a good idea to buy?

Super Micro Computer: On the Rise?

Keith Noonan: Super Micro Computer has become significant in the AI market. With growing sales due to high demand for their servers, some investors worry this trend may not last. The company also faced delays in regulatory filings after unfavorable reports from a short seller.

After a 10-for-1 stock split on Oct. 1, shares rose about 15% but are still down roughly 60% from their March peak. Concerns exist about Supermicro’s reliance on non-proprietary parts, which could pressure profit margins.

To stand out, the company is focusing on liquid cooling technologies and has recently announced they’ve shipped over 100,000 GPUs featuring this tech. Despite the recent gains, the stock is valued at 14 times expected earnings. This reflects skepticism about its future, but there might be potential for significant returns if the AI market continues to grow.

For investors willing to take risks, Super Micro Computer may be an appealing addition to their portfolio.

Chipotle Mexican Grill: A Proven Leader

Jennifer Saibil: Chipotle is a top player in fast-casual dining and has consistently grown even during challenging times like the pandemic and inflation. The company raised its prices to cope with rising costs while maintaining strong demand.

Following a 50-for-1 stock split in June, Chipotle’s stock has surged significantly since its IPO in 2006. Recent sales results are promising, with an 18.2% year-over-year increase in Q2 2024, and earnings per share (EPS) rising from $0.25 to $0.33.

However, the market reacted poorly to the departure of CEO Brian Niccol, who was crucial to the company’s turnaround. This concern was amplified by the announced retirement of CFO Jack Hartung, leaving uncertainty at the top.

Despite management changes, COO Scott Boatwright is now interim CEO, and the company plans to almost double its North American stores to 7,000, while also pursuing international expansion.

Chipotle has a solid growth strategy, and investors still have an opportunity to join in its success story.