In a move that delighted investors, Nvidia Corp. made headlines earlier this week with the announcement of a 10-for-1 stock split. Now, Bank of America suggests that this might just be the beginning, as several prominent tech companies are trading at prices high enough to warrant similar splits.

According to a note from Bank of America, there are 36 companies in the S&P 500 with stock prices above $500, indicating they could be candidates for splits. Microsoft Corp. and Meta Platforms Inc. are among the two members of the Magnificent Seven that approach this price threshold, while Broadcom Inc., Super Micro Computer Inc., ServiceNow Inc., and Netflix Inc. are also mentioned as potential candidates for splits due to their high share prices.

Bank of America notes that high share prices often make a stock prime for split announcements, as management teams may believe that lower stock prices would enhance access to the stock. Booking Holdings Inc. is another company that could be considered for a split, with one share of the online travel agency priced at over $3,500. Earlier this year, Booking also initiated a dividend, which was seen as a shareholder-friendly move.

The list of potential split candidates provided by BofA includes a diverse range of companies from various sectors, with AutoZone Inc., Regeneron Pharmaceuticals Inc., Eli Lilly & Co., and Chipotle Mexican Grill Inc. mentioned due to their hefty price tags. Chipotle, in fact, announced a historic 50-to-1 split earlier this year.

It's important to note that the significance of stock splits is primarily psychological rather than fundamental. While the value of an investor's stake remains the same, the number of shares they own increases. In the case of Nvidia, for example, one share currently valued around $1,000 is set to turn into 10 shares worth approximately $100 each.

Although a high stock price might not necessarily indicate a high valuation, a lower price could make a stock more appealing, particularly for retail investors. Nvidia, which has been the top holding among retail investors, has experienced exceptional share price performance and has more than doubled in value this year, building on last year's surge of almost 240%.

Bank of America views stock splits as a sign of strength and suggests that companies that split their stocks tend to see strong returns in the following year. Historically, stocks have observed 25% total returns in the 12 months after a split is announced, compared to 12% for the broad index. However, the bank also warns that outperformance is not guaranteed, as companies can face challenges in volatile environments.

Nvidia's recent stock split marks its second move of this kind in recent years, following a 4-for-1 split announced three years ago. Other megacap tech stocks, such as Apple Inc. and Tesla Inc., have also undergone splits in the past, further emphasizing the ongoing trend in the technology sector.