Jensen Huang Plans to Sell $810 Million in Nvidia Shares

Nvidia (NASDAQ: NVDA) CEO Jensen Huang, who co-founded the company in 1993, is preparing for the next phase of Nvidia’s growth in artificial intelligence (AI). Despite the company’s impressive performance, Huang recently announced his intention to sell 6 million Nvidia shares, worth approximately $810 million at current prices. Over the past five years, Nvidia shares have skyrocketed by 1,400%, rewarding long-term investors.

Huang’s decision raises questions about potential concerns regarding Nvidia’s future share performance. However, analysts suggest this move does not indicate trouble ahead.

Nvidia’s Strong Performance Continues

Huang has been integral to Nvidia’s sustained success, expressing optimism in a recent earnings call by stating the company is “off to the races.” Nvidia continues to report significant revenue growth, especially with demand for its new Blackwell architecture, and sees AI inference as a major growth driver.

Despite the planned sale, Huang retains over 922 million Nvidia shares, equating to more than 3.7% of the company. Thus, selling 6 million shares constitutes a small fraction of his overall holdings.

This sale is governed by a prearranged Rule 10b5-1 plan, allowing insiders to sell shares without the risk of insider trading allegations. This strategy ensures that sales are conducted without reliance on non-public information.

Strategic Profit Locking

Huang and other executives have previously utilized similar plans to secure profits, reflecting personal financial strategies rather than a negative outlook on Nvidia. The current plan initiated in March allows for share sales until December 31.

Given Huang’s historical usage of these plans and his confidence in Nvidia’s future, the sale seems to be a routine action rather than a signal of waning faith in the company’s trajectory.

For Nvidia shareholders and potential investors, Huang’s move does not serve as a definitive buy or sell recommendation. Long-term holders might consider securing some profits, but Nvidia still shows potential for growth given its market position and the broader growth in AI.

For those yet to invest, Nvidia’s current valuation, trading at 31 times forward earnings estimates—down from 50 earlier in the year—may present an attractive opportunity, especially considering the company’s growth outlook.

Investment Considerations

Investors contemplating stock purchases in Nvidia should note that it was not included among the top recommended stocks by a prominent analyst team. This could indicate that other opportunities may offer higher potential returns.

Past recommendations have yielded substantial profits. For example, a $1,000 investment in Nvidia on April 15, 2005, would now be worth $828,224.

In summary, while Huang is securing profits, he still supports Nvidia’s growth narrative, suggesting a favorable outlook for interested investors.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.