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Release time：2024-06-18 18:59:11 Source：Barron's
Jensen Huang, the CEO and co-founder of Nvidia, has recently sold a substantial amount of his company's shares, cashing out over $31.18 million through a series of transactions on June 13 and 14, 2024. This move comes just nine months after his last significant stock sale in September 2023, where he sold 59,376 shares for $26.9 million.
Nvidia executives collectively cash out
Huang's recent sales are part of a pre-arranged 10b5-1 trading plan, established in March this year. This plan permits the sale of up to 600,000 shares by March 2025, ensuring that transactions are conducted in a systematic manner and not influenced by any non-public information. Despite the recent sales, Huang still retains a significant holding in Nvidia, with nearly 93.5 million shares, accounting for 3.8% of the company's total outstanding shares as of March 25, 2024.
Huang is not alone in liquidating shares. Nvidia's Executive Vice President Deborah Shoquist sold 41,140 shares on June 3, 2024, totaling over $45 million. Board member Dawn Hudson and several other executives, including Tench Coxe, John Dabiri, Michael McCaffery, Brooke Seawell, and Mark Stevens, have also sold various amounts of Nvidia stock in recent weeks. These transactions are part of routine executive compensation plans, involving restricted stock units (RSUs) and performance stock units (PSUs).
AI Boom and Nvidia Stocks Soar
Nvidia's stock has experienced a remarkable rise, driven by the growing demand for AI technology. The company's market value briefly surpassed Apple's, positioning Nvidia as the world's second-largest company before being overtaken by Apple again. As of June 17, 2024, Nvidia's market capitalization stood at $3.22 trillion, ranking it third globally, behind Microsoft ($3.33 trillion) and Apple ($3.32 trillion). Nvidia has joined an elite group of companies that have surpassed the $3 trillion market value mark.
The company's stock price has surged by 164.52% this year, fueled by its leading role in AI chip development. This growth has led to changes in major investment funds, with State Street Global Advisors increasing Nvidia's weight in its Technology Select SPDR Fund (XLK) from 6% to about 21%, while reducing Apple's weight from 22% to around 4.5%.
Nvidia has recently released a large order for NVLink switches, with the order size reportedly seven times the shipment volume of Nvidia's GB200 servers. Morgan Stanley predicts that by 2025, Nvidia will ship 20,000 GB200 DGX NVL72 racks and 10,000 MGX NVL36 server racks. NVLink switches, crucial for these AI servers, enhance data flow between CPUs, GPUs, and accelerators, essential for high-performance computing tasks.
Securities Fraud Allegations
Amidst these financial developments, Nvidia is embroiled in a legal battle over allegations of securities fraud. The U.S. Supreme Court has agreed to hear Nvidia's appeal to dismiss a lawsuit that claims the company misled investors about the extent of its revenue derived from the volatile cryptocurrency market. The lawsuit, led by Stockholm-based investment management company E. Ohman J:or Fonder AB, accuses Nvidia of downplaying its dependence on cryptocurrency-related sales during 2017 and 2018.
The case, initially dismissed by a lower court, was reinstated by the Ninth Circuit Court of Appeals. The plaintiffs argue that Nvidia's record revenue growth during the cryptocurrency boom was misrepresented as stemming from gaming graphics card sales rather than mining-related purchases. Nvidia's stock price experienced significant volatility following these revelations, with a nearly 30% drop in late 2018 after the company acknowledged the substantial impact of crypto mining on its revenue.
In May 2022, Nvidia settled related charges with the U.S. Securities and Exchange Commission (SEC) for $5.5 million, without admitting or denying the allegations. Nvidia's appeal to the Supreme Court aims to dismiss the lawsuit, arguing that the Ninth Circuit's decision invites frivolous litigation against companies.