Nvidia CEO Jensen Huang Sells $78 Million Worth of Company Stock

The CEO of Nvidia Just Sold $78 Million Worth of His Company's Stock. Here's What Investors Need to Know. | The Motley Fool

Nvidia (NVDA -0.03%) stock sent investors on a wild ride so far in 2024. It was trading at a stock split-adjusted price of around $48 at the start of the year. The price got as high as $140.76 at one point in mid-June, then plunged to $99 by early August before recovering enough to trade around $130 a share by mid-August. It then fell 21% over a few weeks to trade around $103 in early September before recovering somewhat this past week, and it now trades around $118. Whew. A wild ride indeed. It's somewhat understandable, of course. As the focal point of the artificial intelligence (AI) boom, Nvidia carries a lot on its shoulders, and expectations are sky-high for this tech stock. Even after beating consensus estimates in its last earnings report, the stock price still slipped. Apparently, Wall Street felt it didn't beat their estimates by enough. While the stock's price trajectory is currently on the upswing, investors are hyper-tuned to its performance and any indication of where it may be headed. It might interest investors, then, that Nvidia's CEO, Jensen Huang, has been selling some of his Nvidia holdings. In the last month alone, Huang sold 720,000 shares totaling about $78 million. This latest sale isn't his first cashing in on shares. Since just the start of July, Huang has sold over 4 million shares worth roughly $500 million. At first glance, this might be seen as a sign that the person who knows the business the most intimately thinks the stock price is going to drop (or that there's trouble ahead). But a more thorough analysis shows it's not. Although I can't know Huang's exact thinking, there's no reason to take these sales as a cause for worry. The simpler explanation comes down to the cost of living. The vast majority of Huang's net worth is tied up in Nvidia stock. Unfortunately, you can't buy a hamburger (or a super yacht) with stock -- at least not easily. Cash is king, as they say. It is far more likely that Huang is simply liquifying a tiny portion of his massive net worth -- valued at around $100 billion today -- to have some cash on hand. The Securities and Exchange Commission (SEC) has rules around executives buying and selling their own company's stock. To avoid any suspicion of insider trading (as well as tamp down potential transaction-related public panic), SEC rule 10b5-1 allows executives to release public plans that outline predetermined, automated stock transactions handled by a neutral entity. While it may look like Huang just sold this stock, he actually decided to do so months ago and did it in a way that suggests he had very little influence on the price. Tracking insider trading can be interesting, but most of the time it means a lot less than it might first seem to. As far as Nvidia's future stock performance, the path ahead has gotten far more complicated, but I still think it's in a strong position. The company's latest quarterly earnings report showed continued growth -- it more than doubled its revenue year over year. The thing investors have to remember is that the major inflection point for Nvidia was the second quarter of last year, so it's natural that the year-over-year growth has cooled a bit from the 200%-plus growth we saw in the last three quarters. Just look at the revenue explode in 2023 in this chart below. While there was some concern that Nvidia could keep the growth going, many of the fears people had didn't materialize. Concern over a delay in Nvidia shipping its latest generation of superchips was overblown, and demand for its current generation remains extremely strong. Rising concerns around a lack of real-world value for AI potentially hurting Nvidia's clients and reducing their spending has also not yet happened. Companies like Amazon, Meta Platforms, and Alphabet are still locked in an AI arms race, and most are expecting to increase their spending, not reduce it. More customers may be around the corner, too. Though Nvidia's data center revenue is highly concentrated in big tech, we could soon see a broader set of commercial clients and even governments begin to invest in earnest. This would be a boon for Nvidia. Government-related contracts can be an extremely lucrative source of revenue and one that is slow to change once the relationship is formalized, providing an additional level of stability. Finally, the company's push into the automotive industry is only just ramping up. In the short term, AI-powered infotainment and safety features will drive revenue, but further on the horizon lies the real prize: Self-driving cars.

Nvidia CEO Dumps $104M NVDA Stock, Bearish Outlook Ahead?

Market watchers are at crossroads over the impact of the selloff. Nvidia CEO Jensen Huang continues his NVDA stock offload raising concerns in many quarters. Recent sales have piled up to $104 million amid the recovery of the asset following a flip in sentiments. This year, Nvidia recorded a significant uptick amid the buzz about artificial intelligence solutions. Nvidia CEO continues his present stock offload strategy amid present market sentiments. A new filing shows Huang sold 240,000 NVDA shares worth $26.2 million on Sept 11, a repeat of a similar transaction involving the same number of shares on Sept 9. However, the latter transaction was worth approximately $25 million. This month, Huang made additional transactions taking the total number to over $104 million worth of shares. Stretching backward, filings with the Securities and Exchange Commission (SEC) show huge sales totaling 5.3 million shares worth about $633 million. Still, the AI chip manufacturer maintains its lead in the market with increasing optimism due to its widely anticipated Blackwell chips. The demand for artificial intelligence solutions sent the asset soaring with a similar spark in AI coins. Nvidia controls 80% of the global chip manufacturing market cap and maintains a positive momentum towards the end of the year. Recently, NVDA stock moved upwards on the developments in exports to Saudi Arabia. The United States government is considering allowing the firm to export chips leading to bullish projects as the company extends its base. Several commentators opine dumping the stock by the Nvidia CEO will send a bearish signal in the market. This is coupled with the major decline recorded by the asset at the start of the month before the rebound. However, macro factors play a huge role, and the jump in its price last week points to bullish demand.