(Bloomberg) — Nvidia Corp. (NVDA) insiders have cashed in on shares worth more than $1.8 billion so far this year — and more selling is on the horizon.
Most Read from Bloomberg
Nearly 11 million shares have been sold by Nvidia executives and directors in 2024, the most in a year since at least 2020 after adjusting for stock splits, according to data compiled by the Washington Service. It represents a tiny percentage of the company’s 24.5-billion outstanding shares, but the sales are coming at a time when investors are already on edge about Nvidia’s delayed Blackwell chips and the longevity of artificial intelligence-related spending.
More sales are planned. While Chief Executive Officer Jensen Huang recently completed the sale of 6 million shares under a pre-arranged trading plan, a trust controlled by director Mark Stevens has filed to sell 3 million additional shares, on top of the 1.6 million he sold this year prior to that filing.
A representative for Nvidia declined to comment on insider sales.
“It definitely doesn’t inspire confidence when you see that level of insider sales but I would definitely couch that in what else is going on,” said Mike Bailey, director of research at Fulton Breakefield Broenniman. For investors looking at whether now is a good time to buy Nvidia shares “this is probably one less reason for someone to make a new purchase.”
The biggest seller this year has been Huang, whose 10b5-1 plan was adopted in March. These plans pre-determine sales on certain dates and aren’t tied to news or share-price moves. There is typically a three-month waiting period before the first sale is allowed under a 10b5-1 plan.
Huang unloaded about $713 million of shares between mid-June and mid-September under that plan — a period when Nvidia shares fell about 5% amid a rotation out of Big Tech and increased scrutiny of the AI frenzy.
Even after executing the plan, Huang still holds Nvidia shares worth more than $100 billion.
Other big sellers include Stevens and fellow director Tench Coxe, who have sold shares this year worth a total of about $390 million and $525 million, respectively.
There have been numerous other pressures on Nvidia shares in the past few months. The biggest factor has been concerns about how long heavy spending on AI computing will continue, according to Denny Fish, portfolio manager at Janus Henderson.
“We’ll get the verdict as we start getting into 2025 and see the numbers as Blackwell is released,” he said, referring to the new processor line which Nvidia has projected will contribute several billion dollars in sales in the fourth quarter.
Nvidia shares have been on a roller coaster ride since June, when the company’s market capitalization briefly topped Microsoft Corp. and Apple Inc. to become the world’s most valuable company. Since then, they’ve suffered two drawdowns of more than 20% amid concerns about tech giants’ spending on AI. Still, the stock has rallied back each time and is now about 10% from the June 18 peak.
And while more insider selling is on the horizon, investors shouldn’t necessarily read sales — especially pre-planned ones — as a sign of bearishness.
“Whether CEOs are buying or CEOs are selling in the long run, it’s not a really good correlation to how the stocks can perform,” said Ken Mahoney, chief executive officer at Mahoney Asset Management. “The CEO of Nvidia is not selling stock because he thinks the growth is slowing down. He thinks just the opposite.”
Top Tech Stories
-
OpenAI has completed a deal to raise $6.6 billion in new funding, giving the artificial intelligence company a $157 billion valuation and bolstering its efforts to build the world’s leading generative AI technology.
-
SoftBank Group Corp. founder Masayoshi Son sketched out one of the most aggressive timelines for the adoption of artificial intelligence yet, envisioning a near future where the technology would run entire households.
-
Global semiconductor makers are monitoring supplies of high-purity quartz, a material critical to the industry, after Hurricane Helene halted production at two North Carolina mines that produce most of the world’s supply.
-
US prosecutors are broadening a probe of potential price-fixing by German software maker SAP SE and tech reseller Carahsoft Technology Corp., seeking to examine the companies’ work with almost 100 government agencies, according to new court records that show the scope of the investigation is far greater than previously known.
Earnings Due Thursday
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.
