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CEO Jensen Huang Sells Chunk of NVIDIA Stock, But Why You Shouldn't
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Wall Street darling NVIDIA Corporation (NVDA - Free Report) saw its market capitalization climb to $2.61 trillion from $358 billion two years ago with the advent of artificial intelligence (AI). However, NVIDIA stock’s unparalleled surge this year hit a speed bump lately due to the violation of antitrust laws, and AI bubble qualms.
Meanwhile, CEO Jensen Huang has sold NVIDIA’s shares, which makes us wonder whether the chipmaker has the potential to increase shareholder wealth. Let’s have a look –
NVIDIA Stock – CEO Sells Shares, Volatility Intensifies
The Securities and Exchange Commission filings revealed last week that Huang off-loaded more than $633 million of the chipmaker’s stock since June. Huang has sold shares in tranches of 120,000 each from June 13 to Sept. 5, which accounts for almost 5.3 million shares.
On Friday, NVIDIA’s shares posted their worst two-week stretch in two years, while the world’s most sought-after AI player was subjected to wild price swings over the past month that dwarfed even the most volatile assets like cryptocurrency.
Geopolitical tensions to legal issues plagued NVIDIA, with the stock witnessing a $279 billion wipeout in a single trading session last week. The U.S. Department of Justice subpoenaed NVIDIA in a mounting antitrust issue.
Does this sound depressing? Fear not; the NVIDIA stock has an upside potential, and remaining bullish would reap benefits in the long run. Here are the positive reasons –
NVIDIA’s Blackwell Chip to be a Game Changer
Investors are waiting for the rollout of the cutting-edge new Blackwell chips. However, engineering snags have delayed the process. NVIDIA has been addressing the design flaws in the Blackwell B200 chip and aims to launch it by the year-end. So, the delay period is not long enough to impact the NVIDIA stock’s 2025 results.
Microsoft Corporation (MSFT - Free Report) , Alphabet Inc. (GOOGL - Free Report) and Meta Platforms, Inc. (META - Free Report) have already ordered Blackwell chips worth billions of dollars, and Amazon.com, Inc. (AMZN - Free Report) is expected to move from Hopper to Blackwell.
NVIDIA confirmed that the demand for Blackwell has surpassed supply and may continue into the next fiscal year. After all, the Blackwell platform has more AI throughput than the current Hopper platform. The new Blackwell graphic processing unit (GPU) has greater processing power, which is the most pressing need. It holds 208 billion transistors, way more than the 80 billion in the present H100 CHIP. Also, Blackwell’s NVLink offers high-speed communication, which is the need of the hour.
Thus, strong demand for the Blackwell chip is expected to boost the NVIDIA stock following its launch. Lest we forget, NVIDIA’s shares surged by double digits in the three months following the launch of two previous architectures — Hopper in the fall of 2022 and Ampere in the spring of 2020.
Neither NVIDIA Stock Nor AI is in a Bubble
In the dot-com bubble, companies’ shares scaled upward based on hype before the real impact of their business models could be felt. However, AI has become an integral part of all businesses. According to Markets and Markets, the AI industry is poised to expand from $214.6 billion in 2024 to $1,339.1 billion in 2030.
NVIDIA is well-poised to make the most of the flourishing AI industry since its chips are essential for AI models deployed across several verticals, including cloud computing. This explains why the company’s H100 graphic cards have huge demand in the AI chip market. Moreover, unlike the stocks in the Internet bubble, NVIDIA has solid fundamentals that validate the company’s stretched valuations, and squash bubble fears.
NVIDIA has generated profits competently since its return on equity (ROE) is almost 120%, which is way higher than the Semiconductor - General industry’s 73.2%. Notably, any ROE above 100% shows that the company’s net income is more than its equity, or the performance is strong.
Image Source: Zacks Investment Research
NVIDIA’s net profit margin is 55%, above the industry’s 47.6%. Any net margin of 20% indicates the company can curtail costs and generate profits.
Image Source: Zacks Investment Research
What’s more, NVIDIA recently approved a stock buyback worth $50 billion, indicating a healthy corporate organization. Share repurchases decrease the number of outstanding shares and increase the value of the remaining shares, which bodes well for shareholders (read more: NVIDIA Approves $50 Billion Stock Buyback: Time to Buy?).
2 More Reasons to be Bullish on the NVIDIA Stock
Being the worldwide leader in GPUs, NVIDIA’s stock will benefit. Huge data is expected to migrate from central processing units to GPUs, per Huang. According to Precedence Research, the GPU market will expand from $56.55 billion in 2023 to $1,414.39 billion by 2034.
NVIDIA’s collaboration with Siemens to enter the metaverse space and the introduction of GeForce in the growing gaming market will act as a tailwind for the company. As a result, the $2.80 Zacks Consensus Estimate for NVIDIA’s earnings per share is up 76.1% yearly.
Image Source: Zacks Investment Research
Strong Price Upside for NVDA Shares
Banking on the highly anticipated launch of the groundbreaking Blackwell chips, inherent capability to crush bubble concerns, the introduction of stock buyback plans, and a dominant player in the semiconductor space gives NVIDIA’s shares the fuel to scale northward despite the current hiccups.
Prominent brokers, thus, have increased the average short-term price target of NVDA by 40.2% from the stock’s last closing price of $106.47. The analysts’ highest price target is $200, indicating an upside of 87.9%.
Image Source: Zacks Investment Research
Moreover, the NVIDIA stock has been trading above the 200-day moving average year to date, a tell-tale long-term uptrend. This is why investors should hang on to this multi-bagger stock and not let it go.
Image: Bigstock
CEO Jensen Huang Sells Chunk of NVIDIA Stock, But Why You Shouldn't
Wall Street darling NVIDIA Corporation (NVDA - Free Report) saw its market capitalization climb to $2.61 trillion from $358 billion two years ago with the advent of artificial intelligence (AI). However, NVIDIA stock’s unparalleled surge this year hit a speed bump lately due to the violation of antitrust laws, and AI bubble qualms.
Meanwhile, CEO Jensen Huang has sold NVIDIA’s shares, which makes us wonder whether the chipmaker has the potential to increase shareholder wealth. Let’s have a look –
NVIDIA Stock – CEO Sells Shares, Volatility Intensifies
The Securities and Exchange Commission filings revealed last week that Huang off-loaded more than $633 million of the chipmaker’s stock since June. Huang has sold shares in tranches of 120,000 each from June 13 to Sept. 5, which accounts for almost 5.3 million shares.
On Friday, NVIDIA’s shares posted their worst two-week stretch in two years, while the world’s most sought-after AI player was subjected to wild price swings over the past month that dwarfed even the most volatile assets like cryptocurrency.
Geopolitical tensions to legal issues plagued NVIDIA, with the stock witnessing a $279 billion wipeout in a single trading session last week. The U.S. Department of Justice subpoenaed NVIDIA in a mounting antitrust issue.
Does this sound depressing? Fear not; the NVIDIA stock has an upside potential, and remaining bullish would reap benefits in the long run. Here are the positive reasons –
NVIDIA’s Blackwell Chip to be a Game Changer
Investors are waiting for the rollout of the cutting-edge new Blackwell chips. However, engineering snags have delayed the process. NVIDIA has been addressing the design flaws in the Blackwell B200 chip and aims to launch it by the year-end. So, the delay period is not long enough to impact the NVIDIA stock’s 2025 results.
Microsoft Corporation (MSFT - Free Report) , Alphabet Inc. (GOOGL - Free Report) and Meta Platforms, Inc. (META - Free Report) have already ordered Blackwell chips worth billions of dollars, and Amazon.com, Inc. (AMZN - Free Report) is expected to move from Hopper to Blackwell.
NVIDIA confirmed that the demand for Blackwell has surpassed supply and may continue into the next fiscal year. After all, the Blackwell platform has more AI throughput than the current Hopper platform. The new Blackwell graphic processing unit (GPU) has greater processing power, which is the most pressing need. It holds 208 billion transistors, way more than the 80 billion in the present H100 CHIP. Also, Blackwell’s NVLink offers high-speed communication, which is the need of the hour.
Thus, strong demand for the Blackwell chip is expected to boost the NVIDIA stock following its launch. Lest we forget, NVIDIA’s shares surged by double digits in the three months following the launch of two previous architectures — Hopper in the fall of 2022 and Ampere in the spring of 2020.
Neither NVIDIA Stock Nor AI is in a Bubble
In the dot-com bubble, companies’ shares scaled upward based on hype before the real impact of their business models could be felt. However, AI has become an integral part of all businesses. According to Markets and Markets, the AI industry is poised to expand from $214.6 billion in 2024 to $1,339.1 billion in 2030.
NVIDIA is well-poised to make the most of the flourishing AI industry since its chips are essential for AI models deployed across several verticals, including cloud computing. This explains why the company’s H100 graphic cards have huge demand in the AI chip market. Moreover, unlike the stocks in the Internet bubble, NVIDIA has solid fundamentals that validate the company’s stretched valuations, and squash bubble fears.
NVIDIA has generated profits competently since its return on equity (ROE) is almost 120%, which is way higher than the Semiconductor - General industry’s 73.2%. Notably, any ROE above 100% shows that the company’s net income is more than its equity, or the performance is strong.
Image Source: Zacks Investment Research
NVIDIA’s net profit margin is 55%, above the industry’s 47.6%. Any net margin of 20% indicates the company can curtail costs and generate profits.
Image Source: Zacks Investment Research
What’s more, NVIDIA recently approved a stock buyback worth $50 billion, indicating a healthy corporate organization. Share repurchases decrease the number of outstanding shares and increase the value of the remaining shares, which bodes well for shareholders (read more: NVIDIA Approves $50 Billion Stock Buyback: Time to Buy?).
2 More Reasons to be Bullish on the NVIDIA Stock
Being the worldwide leader in GPUs, NVIDIA’s stock will benefit. Huge data is expected to migrate from central processing units to GPUs, per Huang. According to Precedence Research, the GPU market will expand from $56.55 billion in 2023 to $1,414.39 billion by 2034.
NVIDIA’s collaboration with Siemens to enter the metaverse space and the introduction of GeForce in the growing gaming market will act as a tailwind for the company. As a result, the $2.80 Zacks Consensus Estimate for NVIDIA’s earnings per share is up 76.1% yearly.
Image Source: Zacks Investment Research
Strong Price Upside for NVDA Shares
Banking on the highly anticipated launch of the groundbreaking Blackwell chips, inherent capability to crush bubble concerns, the introduction of stock buyback plans, and a dominant player in the semiconductor space gives NVIDIA’s shares the fuel to scale northward despite the current hiccups.
Prominent brokers, thus, have increased the average short-term price target of NVDA by 40.2% from the stock’s last closing price of $106.47. The analysts’ highest price target is $200, indicating an upside of 87.9%.
Image Source: Zacks Investment Research
Moreover, the NVIDIA stock has been trading above the 200-day moving average year to date, a tell-tale long-term uptrend. This is why investors should hang on to this multi-bagger stock and not let it go.
Image Source: Zacks Investment Research
NVIDIA stock has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.