Nvidia CEO dumps over $120 million in shares ahead of earnings

Although Nvidia’s (NASDAQ: NVDA) stock is one of the best performers in the stock market in 2024, heavy insider selling activity, especially before its August 28 Q2 earnings report, is worrying some investors.

Namely, its CEO Jensen Huang sold over $128.2 million worth of Nvidia shares in five different transactions in the previous 30 days; notably, all transactions included the same number of shares sold—240,000.

Huang sells over half a billion worth of Nvidia stock in 2024

With trades spanning from June 14 to the most recent one on August 9, Huang has racked in an impressive $578.7 million from 20 different sales, interestingly including the same amount of shares sold in each transaction, which also makes him the only insider that sold NVDA stock in the past 30 days.

Another insider who catches the eye of Nvidia investors is the chair board member Mark Stevens. In 2024, Stevens offloaded $343.6 million worth of Nvidia shares in 11 different transactions, with his most recent one on July 10 being the most sizable, earning him a profit of $103 million from 782,912 NVDA shares sold.

What might stave off investors’ worry is that Nvidia’s CEO trades were preannounced by his Rule 10b5-1 agreement, which is envisioned to comply with insider selling laws by announcing the stock date, amount, and price at the trade. Huang’s trades were planned to run until March 31, 2025, for 600,000 shares sold.

What could insider sales mean for Nvidia stock?

What might concern the investors is that the previous 13F holdings reports, released on August 14, revealed that several hedge funds had partially divested from the semiconductor producer.

Stanley Druckenmiller’s Duquesne Family Office (3% decrease), David Tepper’s Appaloosa Management (84% decrease), and Lee Ainslie’s Maverick Capital  (2.86% decrease) scaled back their investments in Nvidia during the second quarter of 2024.

Others, like Elliott Management, completely divested from their stakes in the chipmaker, calling the artificial intelligence (AI) “overhyped” and claiming that NVDA stock is in “bubble land.”

Speaking with Fortune on August 22, Nell Minow, vice chair of corporate governance specialists ValueEdge Advisors, said that insider sales of NVDA shares “is not a good look.”

“It signals that the stock has jumped tremendously, and they’re getting a little nervous about it; it’s certainly concerning for investors; we ask ourselves: ‘Well, maybe I should be selling mine, too. What are they telling me? If they don’t have the confidence in the stock, then why should I?’”

NVDA stock price chart

Despite constant insider selling activity, NVDA shares demonstrated their robust fundamentals, as the previous month saw them recover a 20% loss in mere two weeks, spanning from August 7, when NVDA stock traded at $98 per share, to August 23, when it closed trading at $123 valuation.

The most recent trading session on August 26 saw NVDA shares close trading at $126.46 after suffering a 2.25% drawback, which extended losses of 1.47% from the previous five trading days.

The semiconductor giant and its stock showed impressive resilience despite the recent stock market downturn and sizable insider transactions that have no doubt exerted downward pressure on its price, managing to recover losses and set the stage for the August 28 earnings call.

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