Nvidia’s CEO has sold shares in virtually every trading session since mid-June. Should investors follow suit and sell?

Since mid-June, Nvidia (NVDA 3.83%) CEO Jensen Huang sold shares of his company’s stock in virtually every trading session. That leads to an obvious question: If the company’s CEO is giving up stock, should you sell your stock too?

Let’s dig deeper into Huang’s trades and see if this could be a signal — or not — to sell the stock.

Daily sale

Huang is selling his Nvidia shares through what is known as a Rule 10b5-1 plan, which is designed to allow company insiders to sell shares without being charged with illegally trading material non-public information. Through these plans, company insiders give brokers set parameters for when the insider wants them to sell stock. This can be based on certain price and/or data triggers and can be configured to sell a certain dollar amount or a certain number of shares.

Once set, the broker executes the plan after a designated cooling off period. Insiders can make changes to the plan, but only during open insider trading windows and if they do not have material non-public information that could affect the stock price.

Huang’s current 10b5-1 plan was established in March and disclosed in a 10-Q filing in May. He arranged to sell 6 million shares (600,000 pre-split) by the end of March 2025.

The parameters of Huang’s plan are quite simple, as he sells 120,000 Nvidia shares each trading day. His first trade was on June 13, and it looks like his plan is about to come to fruition. Through his sales, Huang will have pocketed more than $700 million in cash.

Yes, that’s a lot of stock sold and a lot of cash, but it’s just a drop in the bucket for Huang, who owns more than 860 million Nvidia shares even after this recent sale. Basically, he sold less than 1% of the shares he owned.

Given the gains Huang, who has been Nvidia’s CEO since 1993, has seen, no one can blame him for selling some stock to gain liquidity. His fortune is still very much tied to Nvidia.

Image source: Getty Images

Should investors follow suit and sell Nvidia stock?

The answer to this question comes down to each individual’s circumstances. If you’ve seen huge gains in stocks over the past few years and Nvidia has become a huge part of your portfolio, it may be good portfolio risk management to lock in some gains. After all, every investment comes with risks, and Nvidia is no exception.

Right now, the biggest risk facing the company is future demand. There are still questions about whether demand for the company’s graphics processing units (GPUs) will soon peak and eventually decline as the race for artificial intelligence (AI) infrastructure cools. This could very well come down to how much other companies start to benefit from AI in software and other industries, as infrastructure players can’t be the only AI winners or spending will eventually stop.

For now, however, there doesn’t appear to be any reduction in AI infrastructure spending. Cloud computing operators are increasing their capital expenditure (capex) budgets, and companies such as Alphabet and Meta platforms indicated that there is more risk in underinvesting in AI infrastructure and being left behind than in overinvesting.

At the same time, as AI models advance, they need exponentially more computing power, which comes from Nividua GPUs. For example, xAI’s Grok Large Language Model (LLM) went from using 20,000 GPUs for its second iteration to needing 100,000 for its third iteration, while Alphabet’s Llama 4 is designed to need 10 times more GPUs than Llama 3. Meanwhile, Oracle CEO Larry Ellison recently said that the need for computing power for AI training is not ending when asked on the latest call of company on revenue if there was a shift to less computationally intensive AI inference.

NVDA P/E data (before 1y) by YCharts.

While there’s a risk that future demand will eventually dry up, comments from Nvidia customers indicate that won’t happen anytime soon. Nvidia remains the best-positioned company in AI infrastructure development.

I think Nvidia stock is attractively priced at a forward price-to-earnings (P/E) ratio of about 29x next year’s analyst estimates given the robust growth ahead based on customer feedback. As such, I’m not worried about Huang’s recent selloff and would consider buying the stock.