Jensen Huang Cashes Over $500 Million in 70 Days: Is NVIDIA's Stock Losing Its Appeal Amid the AI Bubble?

NVIDIA's founder and CEO, Jensen Huang, has sold over $500 million worth of NVIDIA stock in the past 70 days, raising concerns in the market about a potential AI bubble.

According to the latest data from the U.S. Securities and Exchange Commission (SEC), Huang sold 120,000 shares daily over seven trading days in August, cashing out approximately $86.7 million. In addition, he reduced his holdings by $169 million and $322.7 million in June and July, respectively, bringing his total sales in the past 70 days to over $500 million.

Huang isn’t the only NVIDIA executive selling shares. For instance, Board member Mark Stevens offloaded around $125 million in stock, while Executive Vice President of Global Business Operations, Jay Puri, sold approximately $10 million.

In recent years, NVIDIA has been a major beneficiary of the rapid development of global AI large models, with its H100 and A100 GPUs commanding over 80% of the market. As AI technology flourishes, NVIDIA's revenue and profits have soared. In 2022, the company reported revenue of $26.97 billion and a profit of $4.368 billion; by 2023, revenue had doubled to $69.72 billion, with profits rising to $29.76 billion.

NVIDIA's stock price skyrocketed by 240% in 2023, with an additional 150% surge in 2024. Since 2022, the price has more than tripled, and the company's market capitalization has exceeded $3 trillion, surpassing both Apple and Microsoft to become the world's most valuable company.

However, NVIDIA's stellar performance has attracted Wall Street’s scrutiny. Besides NVIDIA, six other major tech companies—Microsoft, Apple, Google, Meta, Amazon, and Tesla—are expected to invest over $200 billion in AI. NVIDIA's financial reports indicate that companies like Amazon, Meta, Microsoft, and Google are its largest customers, contributing about 40% of its sales. As these companies release their second-quarter earnings, concerns about AI investments are escalating.

Apple's CEO, Tim Cook, revealed in the Q3 2024 earnings report that Apple has nearly doubled its investment in AI infrastructure. Google CEO Sundar Pichai announced a $50 billion investment in AI this year, while Meta has increased its 2024 capital expenditure to $35-$40 billion. Tesla's CEO Elon Musk also stated that the company will continue to ramp up its AI investments. Meanwhile, Microsoft executives cautioned that significant returns from AI investments might take up to 15 years to materialize.

Since mid-July, U.S. tech stocks, including the Mag 7, have faced investor sell-offs. Berkshire Hathaway, led by Warren Buffett, significantly reduced its Apple holdings by 49.3% in the second quarter, realizing about $45 billion in cash. Wall Street investors are beginning to question whether the AI advancements that triggered NVIDIA's 1000% stock price increase may indeed be overvalued.

Prominent hedge fund Elliott Management has suggested that NVIDIA is in a bubble, while Goldman Sachs has warned that current AI investments might exceed their realistic return potential, suggesting that the situation could even be more severe than the 2000 dot-com bubble.