Nvidia Insiders Profit from Rally with Over $700 Million in Share Sales
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Nvidia Insiders Sell Over $700 Million in Shares Amid Record-Breaking Demand for Chips
Insiders at Nvidia Corp. have offloaded shares worth more than $700 million this year, driven by unprecedented demand for the company's chips. Executives and directors have sold approximately 770,000 shares, excluding the impact of a 10-for-1 stock split on June 10. This marks the highest share sales in a six-month period since early 2023, which saw 848,000 shares sold, as per data from Washington Service.
Stock Surge and Market Demand
The stock's value has skyrocketed by 168% in 2024, owing to an intense competition among companies to enhance their computing power. This has significantly boosted demand for AI accelerator chips, a sector where Nvidia holds a commanding lead. Mark Lehmann, CEO at Citizens JMP Securities, comments that while insider sales are noteworthy, they should not cause undue concern. He points out that some compensation comes in the form of stock and there are no apparent signs of diminishing demand for Nvidia’s products. “I always look for who is coming and going in such situations, and I haven't noticed a significant departure of key personnel, which would be more troubling,” he noted.
Corporate Stance and Sales Details
Nvidia is now the third most valuable company globally, with a market capitalization near $3.25 trillion, just behind Microsoft and Apple. Over a third of this year's insider sales occurred following Nvidia’s fiscal first-quarter earnings report on May 22, which featured a strong revenue forecast and the stock split announcement, propelling the shares even higher. Among the chief sellers are directors Mark Stevens and Tench Coxe. On Monday, CEO Jensen Huang reported selling around $31 million in shares under a pre-arranged trading plan. Nvidia has declined to comment on these sales.
Lack of Insider Buying
While insider selling is robust, there has been a paucity of insider purchases. Excluding exercised options, the last insider stock purchase at Nvidia occurred in December 2020, when CFO Colette Kress bought shares worth $107,390, according to data compiled by Washington Service.
Market Trend Indicators
The ongoing rally in artificial intelligence stocks is beginning to show signs of overheating. A further rise in megacap stocks like Nvidia and Broadcom Inc. on Monday helped the Nasdaq 100 index reach a new record high. However, its 14-day relative strength index—a measure of price momentum—indicates it may be overbought, suggesting a potential pullback could be forthcoming.
Top Tech News
In other tech news, Apple Inc. is discontinuing its Pay Later program, a service that allowed customers to make installment payments, signaling a retreat from offering financial services internally. Foxconn Technology Group's billionaire founder, Terry Gou, has achieved a long-sought goal. Meanwhile, the US Federal Trade Commission has sued Adobe Inc., accusing it of violating consumer protection laws by making subscription cancellations difficult. Huawei Technologies is contemplating taking a portion of in-app purchases on its Harmony OS, emphasizing its growing competition with Apple in the smartphone market. Additionally, UK startup CuspAI, which develops algorithms for new materials, raised $30 million in its initial funding round and has added AI pioneer Geoffrey Hinton to its advisory board.
