The chief executive of semiconductor giant Nvidia (NVDA), Jensen Huang, sold shares worth $41 million earlier this week as part of his prearranged 10b5-1 trading plan disclosed back in March.
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The plan allows Huang to sell up to 6 million shares through year-end. Last month Huang sold shares worth around $50 million in two separate sales.
Share Rally
It’s important to note that a corporate insider’s stock sale doesn’t always signal caution about the company’s future potential. They may sell shares for various reasons, including financial or personal obligations. In this case, it seems Huang is capitalizing on the recent rally in Nvidia shares, up 35% this year-to-date.
The stock is being driven by the surge in demand for AI around the globe, including China, where the firm is set to re-start exports of its H20 chips.
Nvidia is facing political challenges around its Chinese clientele. An export halt on chips to China during the height of President Trump’s trade war, cost the company $8 billion in the second quarter alone.
Now, an agreed 15% revenue-sharing export deal with the U.S. government threatens to take potentially 5-15 percentage points off gross profits for H20 sales.
It hasn’t put off analysts, however, with Piper Sandler’s Harsh Kumar declaring that a new high for Nvidia stock looks likely. He maintains that Nvidia is still in a “demand greater than supply” environment, a condition likely to persist through year-end. Even without China in the mix, U.S. HPC demand is outpacing Nvidia’s production capacity. Adding to that, U.S. hyperscale spending is not just holding up but showing signs of accelerating.
Huang Fire
It is important to add that Huang is not offloading his entire stake in the company. He still has millions of shares left under the 10b5-1 trading plan.
According to the Form 4 filed with the SEC on August 11, Huang sold 225,000 shares for $40,959,534. He now has control over a total of 856,373,625 common shares of the company, with 72,998,225 shares held directly and 783,375,400 controlled indirectly.
As seen above, NVDA stock currently has a Very Negative Insider Confidence Signal on TipRanks, based on Informative Sell transactions worth $438 million, undertaken in the last three months.
It is important to keep an eye on the Informative trades of corporate insiders, given their knowledge of a company’s growth potential.
Is NVDA a Good Stock to Buy Now?
On TipRanks, NVDA has a Strong Buy consensus based on 35 Buy, 3 Hold and 1 Sell ratings. Its highest price target is $250. NVDA stock’s consensus price target is $189.23, implying a 4.21% upside.
