History Says the S&P 500 Will Surge in 2025. 2 AI Stock-Split Stocks to Buy Before It Does.

Market Overview - The S&P 500 is experiencing a bull market that has lasted over two years, with a current pause but expected upside due to advancements in artificial intelligence (AI) [1][2] - The S&P 500 gained 24% in 2023 and an additional 23% in 2024, with historical data suggesting continued growth in 2025 [2] - The index has generated positive returns 78% of the time over the past 50 years, with an average increase of 12% following back-to-back gains of 20% or more [2] Stock Splits and Investment Opportunities - There is a renewed interest in stock splits, which often indicate strong operational and financial results, providing investment opportunities linked to the AI boom [3] - Two notable companies that have recently split their stocks and are tied to the AI sector are Palo Alto Networks and Arista Networks [3] Palo Alto Networks - Palo Alto Networks (PANW) achieved a 23% gain in 2024 and a remarkable 715% increase over the past decade, leading to a 2-for-1 stock split [4][12] - The company is a leader in cybersecurity, addressing the increasing threat of sophisticated hacks and data breaches [5] - Palo Alto has consolidated its cybersecurity modules into a unified AI-driven platform, enhancing its ability to identify and mitigate threats [6][7] - The company generated $2.1 billion in revenue for fiscal Q1 2025, a 14% year-over-year increase, with EPS soaring 77% to $0.99 [10] - Annual recurring revenue from next-generation security services grew to $4.5 billion, up 40%, indicating successful strategic shifts [10] - Despite a high valuation of 47 times earnings, its PEG ratio of 0.14 suggests it is undervalued [12] Arista Networks - Arista Networks (ANET) saw an 88% gain in 2024 and a staggering 2,700% increase over the past decade, prompting a 4-for-1 stock split [13] - The company specializes in high-speed network switches, crucial for data transfer in AI applications [14] - Arista's Ethernet offerings are designed for the demands of large language models, positioning the company well in the AI ecosystem [15] - In Q3, Arista reported $1.8 billion in revenue, a 20% year-over-year increase, with EPS climbing 35% to $2.33, surpassing forecasts [16] - The stock is currently valued at 53 times earnings, but a forward PEG ratio of 0.9 indicates it may not be as expensive as it seems [17]