Recently, documents from the U.S. Securities and Exchange Commission (SEC) showed that Nvidia CEO Jensen Huang sold a total of 372,000 shares of Nvidia stock in 31 transactions between June 13 and August 1, cashing in a total of more than US$470 million.
Among them, the cash-out transaction of US$323 million in July broke the personal monthly cash-out record set by selling nearly US$170 million in June.
Wall Street analysts pointed out that Huang Renxun's timing of cashing out was just right. Not only did he take advantage of the last surge in chip stocks, but he also cashed out before the August crash.
Huang wasn't the only Nvidia executive to sell shares in July.
Relevant documents show that Nvidia board member Mark Stevens also sold about $125 million worth of shares, and Jay Puri, executive vice president of global business operations, sold about $10 million worth of shares.
As of August 5th local time, Nvidia was trading at $100.45 per share, down 6.36%; its total market value was $2.47 trillion.
According to Barron's, citing a regulatory filing from Nvidia, Huang Renxun activated the so-called 10b5-1 rule trading plan on March 14 this year, and he will sell no more than 600,000 shares of Nvidia stock by March 31, 2025. The 10b5-1 plan automatically executes stock transactions when preset conditions such as price and volume are met, which is intended to eliminate any advantages that company insiders may gain from knowing material non-public information. It is worth noting that when the plan was proposed, Nvidia had not yet split its stock.
Nvidia's previous financial report showed that as of March 25, 2024, Huang Renxun held a total of 93.4638 million shares of Nvidia, accounting for 3.79% of the shares.
Judging from market performance, on June 5, Nvidia's market value exceeded US$3 trillion for the first time, and remained above this mark for many days thereafter, reaching US$3.34 trillion at the close of June 18 (closing price US$135.58 per share), surpassing Microsoft to become the world's highest-valued listed company.
If calculated from the closing price on June 18, as of August 5, Nvidia's cumulative decline was 25.91%, of which the decline in August alone was 14.16%.
The selling by Huang and other executives has raised concerns among investors and prompted many to potentially reassess their holdings.
Some analysts pointed out that the stocks sold by Huang Renxun were part of his executive compensation package, including restricted stock units (RSU) and performance stock units (PSU), which is a common practice for corporate CEOs when regulations are met.
Insider selling should not be viewed as the sole indicator for making investment or trading decisions. But some analysts have pointed out that the selling behavior of Huang Renxun and other executives shows that they lack confidence in the company's recent stock price performance.
Elliott Management, a well-known hedge fund, told investors last week that Nvidia is in a "bubble" and that the artificial intelligence technology that has driven the chip giant's rise is "over-hyped."
In fact, in addition to the recent adjustment of the US stock market, Nvidia's current decline also reflects investors' concerns about the company's future fundamentals. The Information magazine reported on August 1 that the US Department of Justice launched an antitrust investigation into Nvidia, mainly because Nvidia's competitors complained that Nvidia may abuse its market dominance when selling artificial intelligence (AI) chips.
The U.S. Department of Justice is reportedly investigating whether Nvidia forced cloud computing providers to buy multiple Nvidia products. The investigation also involves whether Nvidia raises the price of network equipment for these customers if they want to buy AI chips from Nvidia's peers such as Advanced Micro Devices.
In response, Nvidia wrote in a statement: "Our competition is based on decades of investment and innovation, strict compliance with all laws, making Nvidia products publicly available to all cloud services and local clusters of every enterprise, and ensuring that customers can choose the best solution for them."
In addition to the antitrust investigation, the mass production progress of Nvidia's latest products has also attracted investors' attention.
This past weekend, the Financial Times reported that Nvidia and its main supplier TSMC are facing production challenges for their much-anticipated next-generation, most powerful AI chips, which may delay shipments this year. People familiar with the matter said that Nvidia's cutting-edge designs use TSMC's new manufacturing process, and some models of chips have encountered difficulties in preparing for mass production of the Blackwell series of data center chips.
Nvidia declined to comment but reiterated that "Blackwell production is on track" and will begin mass production in the second half of 2024. Nvidia added that demand for existing Hopper chips remains "very strong."
