Nvidia insiders have issued a statement (and count) not making open market purchases for 50 consecutive months.
Optimists have all the reasons to smile for the past two years or more. The Bulls have been firmly under control on Wall Street since the Dow Jones Industrial Average, S&P 500 and Nasdaq composites bottomed in October 2022. Recently, all three indexes have worked on the best closed recordings.
The catalysts are rich, including Donald Trump’s return to the White House, Stock Split’s happiness and corporate income better than expected, but Wall Street sails are the main winds of artificial intelligence (AI). was the rise of.
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The ceilings associated with AI are astronomically high. Providing software and systems with the ability to reason, act and evolve over time without the need for human intervention is a potential long-term game changer for most industries around the world. This is why PWC analysts believe that artificial intelligence will add $15.7 trillion to the global economy by 2030.
The AI revolution had dozens of direct and supplementary beneficiaries, but there is no face for this movement above Nvidia (NVDA) -1.28%)).
Nvidia correctly claims the place as AI Kingpin
When Curtains closed in 2022, Nvidia was the $360 billion high-tech stock best known for its graphics processing units (GPUs) used in PC games and cryptocurrency mining. Less than two years later, it has achieved a market value of over $3 trillion and (easily) became Wall Street’s largest publicly traded company.
Nvidia’s Ascension has something to do with the Hopper (H100) GPU and the next generation Blackwell GPU architecture. They allow for the training of large-scale language models (LLMs) and provide the power of generating AI solutions. The company’s hardware orders were led to the backlog, with CEO Jensen Fan calling Blackwell’s demand “unusual.”
It is an enviable position to have an overwhelming demand for a great product when it comes to computing speed. Due to the lack of AI-GPU, Nvidia was able to charge 100% to 300% premiums on competing AI chips. In turn, they pushed their gross profits into the stratosphere.
Nvidia has been successful beyond AI hardware. The company’s CUDA software platform, which is used by Developers to build LLMS and maximize GPU computing potential, helps clients stay faithful to their ecosystem of products and services .
Enterprise AI spending is still in its early stages, and other chip makers that are particularly consistent with the computing potential of hoppers or next-generation Blackwell GPUs, appear to have Nvidia ideally positioned for the future.
But if investors pay close attention to what Nvidia insiders are doing, they may change their songs.
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Nvidia’s insiders are talking about volume, is anyone listening?
One of the best aspects of spending money on placing your money on Wall Street is that it is more transparent than ever. Click the button to instantly access your sales results, balance sheets, management commentary, and investor presentations.
Additionally, investors can track the buying and selling activities of Wall Street Insiders, representing top executives and executives of public companies. Insiders must file Form 4 with the Securities and Exchange Commission within two days of the trading date.
On December 3, 2024, Nvidia hit a suspicious milestone. This marks exactly four years since the last insider bought the company’s shares in the open market. In this case, according to the filing of Form 4, it was the two children of Chief Financial Officer Colette Cress who were the beneficiaries of the purchase of each of the 100 shares. Over the next four years and two months, Form 4 of 161 was submitted. All of that was an insider sale totaling $3.4 billion.
To be fair, not all insider sales activities are always evil. Many high-ranking executives receive a large portion of their compensation in the form of vested stocks and stock options. Insiders may need to implement options agreements before they expire and may choose to sell company shares to cover federal and/or state tax liabilities.
Again, the 161 disposal for a 0 acquisition over a 50-month period is a very important story. Why are investors needed if the company’s own management team and board of directors don’t consider their stocks as a bargain?
NVDA PS ratio data by YCHARTS. PS = Sales.
Companies at the forefront of the next Big innovation are nothing new to falling into the bubble. Back in the mid-1990s, technological innovations that changed every game have overcome an early stage bubble. It is possible that most companies are missing a clear game plan in AI investment, so they are witnessing the rhymes of history once more.
Nvidia’s rating is also consistent with previous bubbles. Before the DOT-COM bubble burst quarter century ago, Amazon and Cisco Systems peaked at about 40 times the 12-month (TTM). Perhaps unconsciously, Nvidia surpassed approximately 42 times TTM sales last summer.
Even if NVIDIA has well-defined competitive advantages in the AI AI-Accelerated Data Center, sustained sales by insiders and a complete lack of purchase points where Nvidia shares are valued richly.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of Motley Fool’s board of directors. Sean Williams has a job at Amazon. Motley Fool has posted and recommended positions on Amazon, Cisco Systems and Nvidia. Motley Fools have a disclosure policy.
