The AI stock rally has been nothing short of spectacular, with major players like Nvidia, Meta Platforms, Super Micro Computer, AMD, and Microsoft at the forefront, achieving record highs. Amid this surge, a notable trend has emerged: insiders at these companies have started to sell off their shares, sparking a debate among investors.
Nvidia, the standout with a $2 trillion market cap, has seen its shares climb more than 70% year to date, following a nearly 240% increase last year. Despite this, several directors chose to sell shares in late February. Mark Stevens sold 15,000 shares, Michael McCaffery offloaded 4,000, Mark Perry also sold 15,000, and Harvey Jones parted with 65,000 shares.
Meta Platforms has also been in the spotlight, with CEO Mark Zuckerberg selling a significant number of shares. Zuckerberg sold 154,800 shares on March 1, 232,200 shares on Feb. 28, and another 77,412 shares were sold as indicated by a March 5 regulatory filing. This comes as Meta’s shares rallied nearly 40% this year, and the company reported a tripling in profit and a 25% revenue increase in the fourth quarter.
Super Micro Computer, another AI space winner, with its stock up more than 1,000% in the past year, saw insider selling too. Sherman Tuan sold 5,000 shares on Feb. 29, George Kao sold about 1,900 shares on Feb. 15, and Don Clegg sold 28,000 shares in mid-February.
AMD, not to be left out, has seen insiders taking profits as well. Darla M. Smith sold 1,700 shares on Feb. 29, CEO Lisa Su sold 125,000 shares on Feb. 21, and Mark Papermaster offloaded 16,200 shares on Feb. 15. Despite this, AMD’s shares are up more than 39% this year.
Microsoft CEO Satya Nadella and Vice Chair and President Bradford L. Smith also joined the trend, with Nadella selling 1,300 shares on March 1 and Smith selling 48,300 shares in early February.
This wave of insider selling raises the question, might prompt the average investor to wonder: If those with the most intimate knowledge of these companies are selling, is it time to follow suit? While insider transactions can be influenced by various factors, including personal financial planning, the timing and scale of these sales amidst such significant rallies prompt a closer look. Investors should consider whether these moves signal a market peak.
