So far this year, insiders at Nvidia (NVDA.US) have cashed out over $1.8 billion in stock, with more sell-offs anticipated. Data compiled by Washington Service indicates that Nvidia's executives and directors have sold nearly 11 million shares in 2024, marking the highest level of insider sales since 2020.
Although these shares represent only a small fraction of Nvidia's total shares outstanding, the substantial insider selling has raised concerns among investors regarding the delay in the launch of the Blackwell series chips and the sustainability of AI-related expenditures.
Notably, further stock sales by insiders are planned. Nvidia CEO Jensen Huang recently executed a pre-arranged trading plan, selling 6 million shares. Additionally, a trust controlled by board member Mark Stevens has filed to sell an additional 3 million shares after having sold 1.6 million shares earlier this year.
According to Mike Bailey of Fulton Breakefield Broenniman, "This level of insider selling certainly doesn't inspire confidence. It might deter some investors considering whether now is a good time to buy Nvidia stocks."
Jensen Huang has been the biggest seller of Nvidia stock this year, offloading around $713 million worth under a 10b5-1 trading plan since March. Despite these sales, Huang still holds over $100 billion in Nvidia stock.
Other significant sellers include board members Mark Stevens and Tench Coxe, who sold approximately $390 million and $525 million in Nvidia stock, respectively, this year.
Nvidia shares have also been under pressure from other factors in recent months. Janus Henderson portfolio manager Denny Fish pointed out that one primary concern is how long large-scale AI spending will continue, indicating that conclusions will be clearer with the sales data of Blackwell chips in 2025.
Since June, Nvidia's stock price has resembled a roller coaster; the company briefly became the world's most valuable, surpassing Microsoft and Apple. Investors' fears over unsatisfactory returns on tech giants' AI investments have led to two corrections over 20%. Yet, the stock has rebounded and is now about 10% above its June 18 peak.
Despite impending insider sales, these actions—especially pre-scheduled ones—should not necessarily be interpreted as bearish signals. Ken Mahoney of Mahoney Asset Management notes that insider trading activity does not strongly correlate with stock performance in the long term, and Nvidia's CEO is not selling because he expects growth to decelerate—quite the opposite.