A filing with the SEC dated October 1 indicates that Mark Stevens, billionaire venture capitalist and board member of Nvidia (NASDAQ: NVDA), has divested 40,000 shares of Nvidia at a price of $121.0089.
The total worth of this transaction is reported to be $4,840,356. This sale occurred on September 27, when Nvidia’s stock fluctuated between a peak of $122.77 and a low of $119.35, ultimately closing at $121.03.
As of the latest update, the stock is priced at $122.54, reflecting a year-to-date increase of 154.41%.
Rising Insider Selling at Nvidia
Traders and media frequently link insider sales to negative market trends, but whether such sales signify impending price declines often depends on their context.
This year, numerous Nvidia insiders have engaged in significant selling activities. On September 20, CFO Colette Kress sold 66,670 shares for $7.7 million, while Principal Accounting Officer Donald Robertson liquidated 4,500 shares for about $524,293.
Notably, Nvidia’s CEO, Jensen Huang, has finalized his scheduled sale of six million NVDA shares, raising a total of $713 million, according to Barron’s.
Do Insider Sales Indicate a Downturn for NVDA?
Considering these transactions, their combined volume does not definitively indicate that Nvidia is losing momentum.
Many insider sales are conducted through 10b5-1 plans, which require pre-filing at least three months before the sale, allowing insiders to sell shares without legal concerns regarding insider trading.
Interestingly, Stevens did not execute his sale through such a plan, as indicated by a closer examination of the SEC filing, specifically the checkbox in the top left corner showing that this transaction was not carried out under a 10b5-1 framework.
While selling outside of these plans is permissible, it must be reported to the SEC within two business days and is subject to higher scrutiny and potential legal ramifications.
It would be premature to categorize the sale of 40,000 shares outside of a plan as more significant than the sale of over six million shares through 10b5-1 agreements, particularly since insiders, like CEO Jensen Huang, still possess substantial holdings, retaining 75.4 million shares along with an additional 796 million shares across various trusts and partnerships.
NVDA Forecasts and Valuation Concerns
The consensus among institutional investors is optimistic about Nvidia—especially with the introduction of the new Blackwell chip, which is reportedly experiencing “insane demand,” as stated by CEO Jensen Huang. Firms like Rosenblatt Securities have set price targets as high as $200, driven by the company’s ambitious AI strategy.
However, there are voices of skepticism. Meta (NASDAQ: META) CEO Mark Zuckerberg recently raised concerns about the long-term growth potential of AI-focused microchip infrastructure, although he maintains an overall positive outlook.
Others adopt a bearish stance on the stock. Economist and author Harry Dent has claimed that a market-wide bubble has persisted for over a decade, predicting a potential 98% drop in NVDA stock prices during the inevitable correction. Meanwhile, technical analysts like Alan Santana foresee a considerable, though less drastic, 50% drop in the near future.
Ultimately, time will determine the veracity of theories surrounding a potential bubble in the markets or within the AI sector. Traders and investors should focus on macroeconomic trends and monitor Nvidia’s next earnings announcement on November 19 for a clearer perspective on the stock’s long-term trajectory.
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