History Says the Nasdaq Will Surge in 2026. 1 Potential Stock-Split Stock to Buy Before It Does.

The Nasdaq Composite has been on a relentless run over the past few years and continues to notch new highs. The tech-centric index rose 43% in 2023, 29% in 2024, and has risen 18% thus far in 2025 (as of this writing). This trifecta bodes well for the coming year, as history suggests there could be more to come.

There have been five bull markets over the past 50 years that stretched beyond three years. In each of those cases, the market continued to climb, according to data compiled by Ryan Detrick, chief market strategist at financial services company Carson Group. His research shows that bulls that made it past their third birthday continued to rally, lasting eight years on average, with the shortest clocking in at five years and the longest running into double digits.

One contributing factor to the lofty market has been a resurgence in the popularity of stock splits over the past few years. This trend has prompted investors to take a fresh look at companies with impressive growth stories and high sticker prices, which are historically a precursor to a stock split. One such company is Netflix (NASDAQ: NFLX). The streaming video stock has surged more than 1,000% over the past decade (as of this writing), obliterating the 280% gains of the Nasdaq. The company's recent performance suggests there could be more to come.

Image source: Getty Images.

Bullish results

In the second quarter, Netflix reported results that surpassed expectations across the board. Revenue of $11 billion climbed 16%, driving diluted earnings per share (EPS) up 47% to $7.19. Management cited subscription price hikes, strong subscriber growth, and increasing ad revenue for driving the robust top-line growth. Increases in profitability came thanks to higher sales and lower expenses.

Perhaps as importantly, management is predicting its growth streak will continue. Netflix is guiding for third-quarter revenue of $11.5 billion, up 17%, while EPS of $6.87 would increase roughly 27%.

Management cited several factors that contributed to Netflix's bullish growth in Q2:

• Squid Games 3 became the company's third biggest season of any series in the company's history, taking up residence behind seasons 1 and 2.
• KPop Demon Hunters quickly became a global sensation, becoming not only Netflix's most-watched animated film, but Netflix's most popular film ever. It also spawned sold-out sing-along showings in theaters, while becoming the first soundtrack with four simultaneous top-10 songs on the Billboard Hot 100.
• The Katie Taylor vs. Amanda Serrano boxing match became the "most-watched professional women's sporting event of 2025."

This could be just the beginning, as the company has a strong slate of content touching down in the second half of the year. The debut of the second season of Wednesday has already smashed records, with 50 million views in its first four days, and amassing more than 95 million views since its early September release. Let's not forget the highly awaited finale of Stranger Things, which will be released in three parts during the holiday season.

Netflix is also leaning into the success of its live events. The Terence Crawford vs. Canelo Alvarez boxing match was a resounding success, attracting more than 41 million views. The company will host two NFL games on Christmas Day 2025: The Dallas Cowboys vs. the Washington Commanders, and the Detroit Lions vs. the Minnesota Vikings, both of which will stream live on Netflix to bring Christmas cheer to sports fans.

Finally, advertising might well be the company's biggest growth driver going forward. At an industry conference earlier this year, Netflix revealed that the advertising tier accounted for 55% of new subscribers where it's offered, and users for the Standard with Ads tier increased 30% quarter over quarter -- which helps illustrate the magnitude of the opportunity.

The stock-split wildcard

With a stock price of $1,191 (as of this writing), Netflix is among the priciest stocks listed on the Nasdaq. Additionally, this isn't the company's first rodeo. The streaming pioneer conducted a 2-for-1 stock split in February 2004. A second 7-for-1 split came roughly a decade later in July 2015. So the timing is right.

While the company hasn't announced any intention to split its shares, with a current stock price above $1,000, it certainly qualifies. Furthermore, given the resurgence in stock splits, I believe it's only a matter of time.

There's a widely held belief that stock splits are a nothing burger, as they don't change any of the underlying fundamentals of the company. While that's true, it turns out the reality is more nuanced. The robust business performance that led to the stock split typically continues, driving further increases in the stock price. Research reveals that companies that conduct a stock split return 25%, on average, in the year following the announcement, more than double the 12% average return for the S&P 500, according to Bank of America analyst Jared Woodard.

At roughly 37 times expected 2026 earnings, Netflix might appear expensive at first glance. However, as its history illustrates, investors continue to underestimate the streaming giant. Furthermore, given its ability to find new avenues of growth, I'd argue that's a fair price. That's why 2026 could be another banner year for Netflix shareholders -- stock split or not.

Bank of America is an advertising partner of Motley Fool Money. Danny Vena has positions in Netflix. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.