Editor's note: This story has been updated with a comment from Nvidia
Insiders at Nvidia Corp. NVDA have reportedly cashed in over $700 million in shares this year, as the company’s stock continues to rally, according to data compiled by Washington Service.
What Happened: As per the data, executives and directors have offloaded around 770,000 Nvidia shares in 2024, excluding the impact of the company's 10-for-1 stock split on June 10, Bloomberg reported on Tuesday. This marks the highest number of shares sold in a half-year period since the first half of 2023 when approximately 848,000 shares were sold.
The value of the shares sold this year significantly surpasses previous periods, given the stock’s 164% gain in 2024. The surge in Nvidia’s stock price is largely attributed to the increasing demand for AI accelerator chips, a market that Nvidia dominates.
Over a third of the shares sold this year by insiders have come since Nvidia's fiscal first-quarter earnings report on May 22. Among the biggest sellers have been directors Mark Stevens and Tench Coxe. On Monday, CEO Jensen Huang reported the sale of about $31 million in shares under a pre-arranged trading plan.
Despite the numerous insider sellers, buyers have been scarce. Excluding the exercising of options, there hasn't been an insider stock purchase at Nvidia since CFO Colette Kress bought $107,390 in shares in December 2020.
Mark Lehmann, CEO at Citizens JMP Securities, suggests that while the selling is noteworthy, it shouldn’t necessarily raise concerns as some compensation is paid in stock and there appear to be no signs of slowing demand for the company's products.
Nvidia declined to comment on the matter.
Why It Matters: The report appears after the 10-for-1 stock split by Nvidia in June, aimed at making shares more accessible to employees and investors. However, Goldman Sachs cautioned investors about expecting a sustained rally, stating that stock splits generally offer limited long-term benefits.
The AI rally is showing signs of overheating, with the Nasdaq 100 index reaching a fresh record high due to a further rally in megacap stocks including Nvidia and Broadcom Inc. Its 14-day relative strength index is now at its most overbought level since 2018, indicating a potential pullback.
According to Lumida Wealth co-founder Ram Ahluwalia, Nvidia’s strength has led to declines in other stocks as investors are drawn to the tech giant. This trend, coupled with the recent insider selling, could potentially impact Nvidia’s stock performance in the future.
In June, Nvidia reached $3 trillion in market cap, joining Apple and Microsoft as the third company to achieve the milestone.
Price Action: On Tuesday, Nvidia was trading 0.60% higher at $131.75 in the pre-market after closing at $130.98 the previous day, according to Benzinga Pro.
Photo via Shutterstock
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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