Reduced holdings at a high level, Huang Jenxun cashed out 570 million yuan in 5 days! Nvidia's market value evaporated 1.6 trillion yuan in 2 days

National Business Daily

2024-06-22 13:22Posted on the official account of Sichuan Daily Economic News

After only one day of sitting on the throne of "the world's first stock", Nvidia "fell off the altar".

"Boss" Jensen Huang took the lead in reducing his holdings at a high level, cashing out 570 million yuan in five days, and a large number of executives, including CFO and executive vice presidents, are also reducing their holdings. According to the data, the total amount of cash cashed out by Nvidia's executives and directors this year is about 5 billion yuan.

Nvidia lost the "world's No. 1 market capitalization"

Huang Jenxun cashed out 570 million yuan at a high level

On Friday (June 21), local time, Nvidia fell nearly 5% after the U.S. stock market opened. At the close, Nvidia fell 3.22% to close at $126.57 per share, with a market capitalization of $3.11 trillion. Compared with the peak market value of $3.34 trillion on June 18 local time, after two days of decline on June 20 and June 21, Nvidia's market value has evaporated by more than $220 billion (about 1.6 trillion yuan).

Nvidia only served as the "world's No. 1 market capitalization" for one day on June 18 local time (the U.S. stock market was closed on June 19), and it fell rapidly. As of Friday's close, the "world's No. 1 market capitalization" was recaptured by Microsoft, with a total market capitalization of $3.34 trillion, followed by Apple, with a total market capitalization of $3.18 trillion.

ACCORDING TO DOCUMENTS DISCLOSED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION (SEC), NVIDIA CEO HUANG JEN HSUN INTENDS TO SELL 120,000 SHARES OF COMMON STOCK ON JUNE 20, CORRESPONDING TO A TOTAL MARKET VALUE OF $16.3049 MILLION.

Based on this calculation, Huang Jenxun has reduced his holdings of 600,000 shares of the company in five trading days since June 13, cashing out more than 79 million US dollars, equivalent to more than 570 million yuan. However, these stocks represent a smaller percentage of Huang's total holdings, which he held more than 90 million shares of Nvidia as of March 25 of this year.

At the same time, Nvidia's executives are also reducing their holdings and cashing out. In addition to Huang, Nvidia CFO Colette Kress sold $12.7 million worth of stock. Previously, Nvidia Executive Vice President Deborah Shoquist also sold 41,140 shares on June 3, 2024, cashing out more than $45 million. Other Nvidia executives who have cashed out include Dawn Hudson, Tench Coxe, John Dabiri, Michael McCaffery, Brooke Seawell and Mark Stevens, who have also sold varying amounts of Nvidia shares in recent weeks.

According to data compiled by Washington Service, excluding the impact of the 10-share split on June 10, Nvidia executives and directors have sold about 770,000 shares of Nvidia shares so far, cashing out more than $700 million (about 5 billion yuan). Since Nvidia's fiscal first-quarter results were announced on May 22, more than a third of insiders have reduced their stock holdings.

Can the stock price continue to rise?

Analysts are divided

According to Yicai, it was recently reported that Huang held a series of meetings with executives late last year to discuss a growing concern about whether Nvidia's largest customers will run out of data center space to install Nvidia chips, which may affect Nvidia's sales. Huang doesn't want the company to one day decline like former hardware giants like Cisco, and he's pushing the company into software and cloud services to compete with its biggest customers. According to other market sources, Nvidia's competitor, AI chip startup Cerebras, has secretly submitted IPO documents to securities regulators.

Currently, Nvidia is broadening its software revenue beyond GPUs (graphics processing units). In 2023, NVIDIA launched the NVDIA DGX Cloud AI-as-a-Service platform. DGX Cloud is a cloud-based AI supercomputing service, including cloud-based AI infrastructure and software.

In addition, Nvidia is also competing for other customers outside of the cloud computing giant. At the World Government Summit in Dubai in February, Huang bluntly said that every country should build its own "sovereign AI." "Sovereign AI" refers to a country's ability to build AI using its own infrastructure, data, workforce, and business network. NVIDIA's "sovereign AI" customers come from Singapore, Japan, France, Italy, India and other places. Nvidia revealed in May that "sovereign AI" is expected to bring in nearly $10 billion in revenue for the company this year, compared with zero last year.

Analysts have mixed opinions on the future performance of Nvidia's stock price.

Paul Wick, a fund manager at Seligman Investments, has been reducing his holdings in Nvidia stock in recent weeks, noting that 60 to 70 percent of Nvidia's revenue comes from its top 10 customers, making Nvidia inherently much riskier than Microsoft or Google. "Microsoft or Google has a very low concentration of customers, in the thousands."

Other market analysts believe that the volatility of Nvidia's stock price may be short-lived. "Nvidia's share price has climbed sharply...... It may make it vulnerable to profit-taking in the short term. However, any fluctuations are likely to be short-lived. BofA Securities analyst Vivek Arya wrote in a research note.

Vivek Arya pointed out that the deployment of AI hardware could be a 3~5-year cycle, and now it is just entering its second year, while Nvidia will still launch the next generation of Blackwell chips, and the chipmaker is increasingly making money from the software. Vivek Arya maintains a $150 price target on Nvidia stock.

Kevin Dempter, an analyst at Renaissance Macro Research, pointed out that Nvidia's stock price saw a similar trend in early March this year, with the stock briefly retraced by 20%. He believes that a similar 20% pullback would bring Nvidia back to trading at around $110 at the start of the month.

(This article does not constitute investment advice, and you do so at your own risk)

Editor|Duan Lian Du Hengfeng

Proofreading|He Xiaotao

The daily economic news is synthesized from China Fund News, China Business News, Finance Associated Press, public information, etc

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