Nvidia insiders have sold over $700 million worth of shares as the company’s stock rises to a record high, showing confidence in ongoing demand for its AI chips.
As Nvidia Corp. (NASDAQ: NVDA) continues its meteoric rise on the stock market, insiders have taken advantage of the opportunity to sell more than $700 million worth of shares this year.
These sales are fueled by a strong demand for Nvidia's AI accelerator chips, which have dominated the market and drove its growth.
Thanks to the tech industry’s arms race to enhance computing power, Nvidia’s stock has skyrocketed to a staggering 168% in 2024. This surge has enabled Nvidia to become the third most valuable company globally, with a market capitalization of approximately $3.25 trillion.
The bulk of insider sales occurred after Nvidia’s fiscal first-quarter earnings report on May 22, which exceeded revenue forecasts and announced a 10-for-1 stock split, sending shares soaring once again. Top sellers are directors Mark Stevens and Tench Coxe, as well as CEO Huang Jensen who sold about $31 million in shares under a pre-arranged trade plan.
Although insider sales are not uncommon, especially when compensation includes stock options, the absence of insider purchases since December 2020 raises questions. However, Mark Lehmann, CEO at Citizens JMP Securities, suggests that the selling is not alarming given the lack of an exodus among key personnel and sustained product demand.
“Anytime you see this kind of wealth being created and the type of market cap being created, I always look for who is coming and going and I have not seen an exodus of the people that got us to this market cap,” he said in an interview. “That would be more concerning.”
As Nvidia continues to grow, the broader AI market rally shows signs of potential overheating. The recent surge in the Nasdaq 100 index to record highs suggests that a pullback may be imminent, mirroring conditions that prevailed in 2018.
