Nvidia on a roller coaster ride: CEO sells shares worth millions

Nvidia's shares have given investors a harrowing experience in 2024. The stock started the year at an adjusted price of around $48. By mid-June, it reached its peak at $140.76, but then dropped to $99 in early August, before climbing back to about $130 in mid-August. Subsequently, the price fell by 21% within a few weeks, stabilizing at around $103 in early September, only to recover to about $118 in the last week. This volatile rise and fall highlight investor anxiety. These intense fluctuations are partially understandable. As a central player in the artificial intelligence (AI) boom, Nvidia bears an immense burden of expectations. Despite surpassing consensus estimates in the last quarterly report, the stock price declined because investors likely anticipated stronger results. This tense atmosphere underscores the importance of Nvidia's performance and growth expectations. Interestingly, Nvidia CEO Jensen Huang has sold approximately 720,000 Nvidia shares worth around $78 million in recent weeks. Since July, his sales have totaled over 4 million shares valued at approximately $500 million. While this transaction might initially appear alarming, a closer examination shows that it is not. It seems Huang is merely converting a minor portion of his enormous net worth, estimated at roughly $100 billion, into liquid assets. According to guidelines from the U.S. Securities and Exchange Commission (SEC), executives like Huang must plan their stock trades early and transparently to avoid insider trading and related speculations. SEC Rule 10b5-1 allows these executives to publish public plans that include automated stock purchases and sales. This suggests that Huang planned his sales months in advance. Although insider trading can be of interest, it generally causes less concern than it appears. Nvidia's growth remains impressive. In the last quarterly report, revenues more than doubled year-over-year. Concerns about the continuation of this growth seem unfounded, as delays in the delivery of Nvidia's newest superchips had no significant impact. Moreover, demand from major technology companies such as Amazon, Meta Platforms, and Alphabet remains strong. Additionally, Nvidia could soon gain more customers, including governments. Such governmental contracts offer a stable and long-term source of revenue. In the automotive industry, Nvidia also has big plans: in the short term, through AI-driven infotainment and safety features, and in the long term, through the potential for self-driving cars. For investors, it is interesting to note that while Nvidia is not currently listed among the top recommendations of the "Motley Fool Stock Advisors," a long-term investment in the stock could still yield significant returns.