Nvidia CEO Keeps Selling Stock. Should Investors Follow His Lead?

Nvidia (NASDAQ: NVDA) CEO Jen-Hsun Huang has been selling shares of his company over the past two months, including 840,000 shares last week worth $59.3 million. The CEO has benefited from the stock’s surge, which has more than doubled this year and is up 2,700% over the past five years.

Let’s take a closer look at Nvidia’s recent sales by executives and see if investors should follow suit.

Executives dump Nvidia shares

Huang’s sale of Nvidia shares last week is a continuation of his stock sales in recent months. Since June, Huang has sold 2.88 million Nvidia shares and gifted another 445,000.

The sales are made under a so-called “Rule 10b5-1” plan, which allows company insiders to sell company stock by following predetermined trading instructions. The plans begin after a “cooling-off period” and are typically set up to avoid conflicts of interest and avoid insider trading issues.

Huang initially put the 10b5-1 plan in place in March and plans to sell 6 million shares (adjusted for the split) by the end of March 2025. However, with the CEO having already sold nearly half of the 6 million shares set to be sold, he is on track to complete the trading plan in the coming months.

While 6 million shares of Nvidia stock is a lot of money, Huang currently owns 864.1 million shares of Nvidia stock. Therefore, the stock sales are just a drop in the ocean for the CEO.

Huang isn’t the only Nvidia insider to sell shares in the past two months. CFO Colette Kress, principal accounting officer Donald Robertson Jr., executive vice president of operations Debora Shoquist, executive vice president of global field operations Ajay Puri and a handful of directors have also sold shares. Most of them, however, continue to hold significant positions in Nvidia stock.

Given the wild swings in the stock price over the past few years, it’s no surprise that Nvidia’s executives would want to cash in on some of their good fortune. Nor is it a bad portfolio management decision to diversify some of their holdings away from what is most likely their largest source of wealth by far.

Should investors follow suit and sell Nvidia shares?

This is a bit more complicated than it seems, because every individual’s situation is different. For investors who have built up huge gains in the stock, it might certainly be prudent to reduce their positions and take some profits. Having a position that represents a large percentage of your portfolio, for example, increases risk, and ultimately, no one has a crystal ball to predict the future.

The story continues

That said, Nvidia continues to look to have a long runway for growth with artificial intelligence (AI) still in its early stages and companies continue to look to develop data center infrastructure to support AI applications. graphics processing units (GPUs) are used for both large language model (LLM) training and AI inference, and the demand for its…