Following a series of strong performances over the past several days, Nvidia (NASDAQ:NVDA) stock is softening up on Tuesday. Indeed, recently released insider transactions are adding a wrinkle to Nvidia’s otherwise blistering narrative. Essentially, those closest to the business have been selling NVDA stock.
Since May 22, insiders have sold $64.32 million worth of Nvidia, or 57,511 shares. Of course, on that day, Nvidia released its first-quarter earnings report for fiscal 2025.
The results for the period blew past analyst expectations, with adjusted EPS landing at $6.12 per share on revenue of $26.04 billion. In contrast, Wall Street had anticipated adjusted EPS of $5.59 on sales of $24.65 billion. As expected, demand for artificial intelligence (AI) related applications saw major entities buy up Nvidia processors.
However, concerns exist about whether NVDA stock can continue impressing investors. Recently, the company acknowledged that just one customer provided a large portion of revenue contributions. Further, companies buying from Nvidia may eventually seek to reduce their dependency on its chips, which could negatively impact the business.
Nuances Cast a Shadow Over NVDA Stock
To be clear, insiders sell shares of their companies for myriad reasons, not all of which are negative. Insider selling can happen for tax considerations, or simply because the seller wants to enjoy the fruits of their labor. Selling securities accomplishes exactly that.
However, there’s generally only one reason investors buy shares: They believe the value will rise. In that sense, the insider sells present an ambiguous framework. Adding to the difficulty, the sells picked up soon after the blockbuster Q1 earnings report.
Even more perplexing, Gurufocus shows that in the past three years, insider transactions have all been one way: Out the door. The site shows 4 million shares sold over that period.
Again, these insider sells don’t guarantee that NVDA stock will stumble from here on out. Moreover, analyst ratings for the stock are robust, with shares clocking in as a consensus strong buy on TipRanks. Still, an average price target of $1,202.71 per share leaves NVDA little room for implied growth. Combined with the insider sells, prospective investors should think carefully before proceeding with Nvidia.
On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
