The semiconductor sector has been one of the strongest performers in 2024, largely driven by AI-related demand. For example, Nvidia (NVDA) has surged more than 170% year-to-date, while the VanEck Semiconductor ETF (SMH) is up 51% over the same period. But despite this rally, insiders—executives and directors—are selling their shares at record levels.
According to Washington Service, which tracks insider trading, semiconductor insiders sold $1.35 billion worth of company stock in the third quarter of 2024. This figure is the highest quarterly value recorded for the sector and includes pre-planned sales under 10b5-1 trading plans. However, the volume of sales is raising concerns among market experts.
Nvidia (NVDA) Massive Insider Sales Despite AI Growth
Leading the pack in stock sales is Nvidia, a company at the forefront of the AI boom. CEO Jensen Huang sold over $700 million in shares during the second and third quarters of 2024. While these sales were part of a pre-planned trading strategy, they still represent a significant reduction in his personal holdings. Huang remains Nvidia’s largest individual shareholder, controlling about 3.5% of the company. Additionally, board member Tench Coxe sold $235.7 million in shares in late September, contributing to the nearly $960 million of Nvidia stock sold by insiders in Q3.
Nvidia remains one of the top performers in the market, but the large insider sales are something investors should keep an eye on, especially given the stock’s significant gains this year.
Broadcom (AVGO) CEO Unloads Shares Amidst Strong Sector Performance
Broadcom’s CEO, Hock Tan, sold 275,000 shares worth $46.9 million between July and September. Despite the sales, Tan still holds 1.3 million shares in the company. He wasn’t alone—other insiders, including a company officer and director, also sold shares, which VerityData reported as a cluster of insider sales toward the end of September.
While Broadcom’s stock has performed well, the insider sales could be signaling caution from those within the company as the stock has already had a strong year.
KLA Corp (KLAC) Cluster of Insider Sales Raises Concerns
At KLA Corp, six insiders, including CEO Richard Wallace and CFO Bren Higgins, sold a total of $29.9 million worth of shares in the third quarter. Most of these sales were carried out under 10b5-1 trading plans, but the high volume of selling is drawing attention from investors.
KLA’s fundamentals remain solid, but the insider activity suggests that the stock may be nearing its upper valuation limit, prompting some to sell.
What Should Investors Do?
While insider sales can happen for many reasons, the large volume of sales within the semiconductor sector is worth noting. As these stocks continue to rise, some insiders may believe they are fully valued. Investors should carefully assess their positions and consider whether it’s time to take profits or hold on for potential long-term gains.