Nvidia’s (NASDAQ: NVDA) share price is recording positive momentum after sustained weakness, during which the equity struggled to breach the $120 resistance mark.
The gains come after NVDA failed to replicate the general market momentum that had turned bullish after the Federal Reserve interest rate cut.
As of press time, NVDA was up over 4%, trading at $121 during the Tuesday, September 24 session. The momentum has helped the semiconductor giant erase losses on the weekly chart, where the equity is up 4.8%. However, Nvidia’s recent volatility remains evident in the monthly timeframe, where NVDA has corrected by over 3%.
Why is Nvidia stock rallying
Considering that Nvidia failed to move in tandem with the general market, the question is what might be driving the equity now. As it stands, the stock is possibly reacting positively to a shift in insider trading dynamics.
In this case, investor sentiment has turned bullish after a report indicated that CEO Jensen Huang has completed selling the maximum number of shares under a previously agreed trading plan. Notably, the executive has been on a selling spree in recent months, leading to questions regarding the stock’s short-term outlook.
The Rule 10b5-1 trading plan was set to expire in March 2025, but it has emerged that Huang has offloaded all six million shares earlier than the stipulated timeframe. According to filings, Huang’s offloading of the shares occurred between June 14 and September 13, netting approximately $713 million.
Indeed, the selling spree has not only centered around Huang. Other top executives have also offloaded their stakes in the company. For instance, Nvidia’s third-largest shareholder and director, Tench Coxe, sold his shares valued at $235 million between September 19 and September 20.
Other sellers include Chief Financial Officer Colette Kress, who sold 66,670 shares on September 20, alongside Principal Accounting Officer Donald Robertson, who offloaded 4,500 shares.
Despite CEO Huang reducing his stake, Nvidia’s stock rise signals a positive shift in investor sentiment. Insider sales, especially by key executives, can create uncertainty and pressure on selling.
Once these sales are complete, as in this case, that pressure eases, allowing the stock to recover. Therefore, investors likely view Huang’s sales as part of a routine trading plan rather than a lack of confidence in the company’s future.
What next for NVDA stock
Looking at Nvidia’s next possible stock trajectory, an analysis shared by the charting platform Trend Spider in an X post on September 24 notes that the equity is signaling possible continued strength. In this case, the stock has surged to new month-to-date highs, breaking out dramatically after bouncing off the 50-day simple moving average (SMA).
The technology firm depicts an ascending trend line, which has supported the stock over the past week. After struggling to breach the resistance near $120, Nvidia broke through the level, coinciding with a bullish crossover, further signaling the strength of this move.
Meanwhile, beyond the technical outlook, Nvidia still has key underlying fundamentals stemming from the company’s role in the general artificial intelligence chip space. As things stand, the company is witnessing strong demand for its chips, with the upcoming Blackwell chips expected to drive further growth.
In summary, Nvidia’s recent stock surge, despite insider sales from key executives, reflects growing investor confidence in the company’s long-term prospects. Overall, supported by strong technical indicators and sustained demand for its AI chips, Nvidia is well-positioned for continued growth.
Source: https://finbold.com/heres-why-nvidia-nvda-stock-is-surging/