One of the most important pieces of generative artificial intelligence (AI) development is sophisticated chipsets called graphics processing units (GPUs). Right now, Nvidia (NASDAQ: NVDA) absolutely dominates the GPU realm thanks to its A100 and H100 chipsets.
While these products contributed to record revenue and profit growth for Nvidia over the last couple of years, the company's new Blackwell series GPUs could wind up being its biggest product yet.
With Blackwell set to launch later this year, is now a good time to buy Nvidia stock? Below, I'll reveal one clue that could help in making your decision.
Jensen is a great marketer
CEOs are more than just executives who sit atop the organizational structure. They are often masters at marketing, and Nvidia CEO Jensen Huang is no exception.
During a recent interview on CNBC, Huang said that demand for Blackwell is "insane" and that "everybody wants to have the most and everybody wants to be first."
All things considered, early signs indicate that Nvidia will have no problem selling its Blackwell GPUs. But with so much potential on the horizon, I just can't help but fixate on one peculiar statistic.
What are Nvidia insiders doing with the stock?
The term "insider" is applied to people such as members of a company's board of directors or senior executives. Entities or investors owning over 10% of the company are also considered insiders.
Many of Nvidia's insiders have been selling the stock throughout 2024. Granted, much of the activity stems from terms of automatic sales protocols agreed upon in the past. However, there's one thing surrounding Nvidia's insider activity that I can't seem to get over.
According to public records, the last time an insider at Nvidia bought stock was back in December 2020, when the company's chief financial officer, Colette Kress, bought 200 shares on the open market.
I fully understand that rules set forth by the Securities and Exchange Commission (SEC) pertaining to insider buying and selling are stringent. Right now, it's highly likely that Nvidia's insiders know a lot of details surrounding Blackwell that are not yet public.
This could include production volumes, purchase orders, backlog trends, and more. For this reason, it would look a little nefarious if an insider made a massive purchase of the stock as the Blackwell launch looms.
However, let's zoom out and think about the bigger idea here.
The prospects of AI have been the primary pillar of Nvidia's bull thesis for a couple of years now. Moreover, developing a successor product to the H100 was not an overnight project. Considering those points, insiders had the opportunity to scoop up shares in anticipation that Nvidia's research and development (R&D) investments would bear fruit at some point down the road.
Looked at from another perspective, insiders may be cashing out because they think Nvidia's share price is unlikely to be an outsize multibagger again over the next couple or even several years. When you layer on top that big-name hedge funds run by Ken Griffin, David Shaw, and David Tepper have also been offloading Nvidia stock, I'm hard-pressed to see a reason to buy shares at the moment.
I believe Blackwell will serve as a near-term catalyst for Nvidia's growth. After the launch, I'd keep a keen eye out to see whether insiders continue selling or if someone finally buys shares after so many years without doing so. Should that happen, it could signal that insiders think Nvidia stock is attractively valued and has significant upside.
At the end of the day, I am sort of thinking that Blackwell will ignite some short-lived pops in Nvidia stock, making it a lucrative trading opportunity. But as a long-term investor, I'd encourage shying away from trading or buying into momentum and instead seeking steady, gradual winners that can last several years.
Should you invest $1,000 in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $812,893!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of October 7, 2024
Adam Spatacco has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
Should You Buy Nvidia Stock Before the Blackwell Launch? 1 Incredibly Important Detail May Give You the Answer. was originally published by The Motley Fool