NVIDIA's stock price plummeted by 6.7%, with executives cashing out over $700 million. The future trend remains a mystery?

According to the financial news app Zhitong Finance, on Monday local time (June 24th), NVIDIA (NVDA.US) experienced a sharp volatility in its stock price, plunging by 6.7% in a single day, marking the largest drop in two months. This marks the third consecutive trading day of decline, leading to a rapid shrinkage of over $220 billion from the company's market value peak of $3.34 trillion on June 18th, with the current market value falling below the $3 trillion mark. From a technical perspective, NVIDIA has officially entered a correction phase, with a drop of over 10% from its recent closing high. It is understood that NVIDIA briefly topped the "global market value first" throne on June 18th, however, after reaching this market value peak, investors have chosen to take profits, and the company's CEO, Huang Renxun, has also started selling stocks.

According to documents disclosed by the U.S. Securities and Exchange Commission, Huang Renxun plans to sell 120,000 shares of common stock on June 20th, with a market value of approximately $16.3049 million. In the five trading days since June 13th, Huang Renxun has already sold a total of 600,000 shares, cashing out over $79 million, equivalent to over 570 million RMB. Nevertheless, these sold shares only account for a small portion of Huang Renxun's total holdings. As of March 25th, Huang Renxun held over 90 million shares of NVIDIA stock.

Meanwhile, other executives at NVIDIA are also selling stocks to cash out. CFO Colette Kress sold stocks worth $12.7 million. Executive Vice President Deborah Shoquist sold 41,140 shares on June 3rd, cashing out over $45 million. Other executives such as Dawn Hudson, Tench Coxe, John Dabiri, Michael McCaffery, Brooke Seawell, and Mark Stevens have also sold varying amounts of stocks in recent weeks.

According to data compiled by Washington Service, excluding the impact of the 10-for-1 stock split on June 10th, NVIDIA executives and directors have sold approximately 770,000 shares to date, cashing out over $700 million, equivalent to about 5 billion RMB. Since NVIDIA announced its first-quarter earnings on May 22nd, more than one-third of insiders have chosen to sell stocks.

What is the future outlook for NVIDIA's stock price after the correction?

Jonathan Krinsky, Chief Market Technician at BTIG, stated on Monday that NVIDIA has entered into the "unknown territory" as one of the largest companies in the United States. Despite the stock price falling for the third consecutive day, NVIDIA's year-to-date increase is still up by 138%, making it the best performer in the S&P 500 index.

Earlier this month, NVIDIA briefly surpassed Microsoft and Apple to become the company with the highest market value. The stock price of this artificial intelligence chip manufacturer is currently about 100% above its 200-day moving average. Krinsky pointed out that since 1990, the maximum extent to which U.S. companies' stock prices have been above their 200-day moving average when reaching the market value peak is 80% This record was set by Cisco (CSCO.US) in March 2000.

Krinsky emphasized other market data points: despite significant differences in fundamentals, NVIDIA's stock price has risen by about 4280% in the past five years, while Cisco rose by about 4460% in the five years before reaching its peak. In the past 18 months, NVIDIA's increase of 827% is twice that of Cisco's 18-month increase in 2000.

More broadly, last week saw record inflows into large tech/growth funds including Vanguard Growth ETF, SPDR Technology Select Sector ETF, VanEck Semiconductor ETF, and Vanguard Large-Cap Growth ETF. "It feels like a sign of us going through a bubble after bubble," Krinsky said.

The Nasdaq 100 Index has gone 379 trading days without a 2.5% decline, the longest continuous decline since 1985.

Krinsky stated, "We still worry that many of this year's leaders will unwind in the short term." However, even within the so-called "Fab 7" stock group, he sees diversification, with stocks like Amazon and Google showing "constructive trends and not overextended."

The market will enter July trading next week. July is a well-known bullish month, with the Invesco QQQ Trust ETF not having a loss in July since 2007.

Krinsky said, "If there isn't a meaningful pullback this week, it will be hard to see further strength in July as some of the move appears to have been front-run."

In contrast, investment bank Jefferies is optimistic about NVIDIA's stock outlook, raising the target price from $135 to $150 while increasing the valuation of this AI chip maker. Jefferies has a "buy" rating on NVIDIA, showing confidence in the company's future.

Led by Jefferies analyst Blayne Curtis, the team, including Fubon analyst Sherman Shang, noted the mixed performance of AI stocks in the past month. While Broadcom (AVGO.US) and NVIDIA have performed well, investors have shown stronger short interest in AMD (AMD.US) and Marvell Technology (MRVL.US), hoping to gain more AI investment opportunities through the Edge AI/Mobile sector.

Analysts believe that while it is still early to predict the market landscape in 2025, they have indeed noticed growing concerns in the market about AMD's product line However, NVIDIA still maintains its leadership position in the industry while continuously shaping the market. For example, analysts see Marvell and Astera Labs (ALAB.US) growing together with NVIDIA, but also point out that NVIDIA's decisions on each generation of products could substantially change the market landscape.

Jefferies analysts have just concluded a week-long marketing event with Mr. Shang and plan to meet with the management teams of NVIDIA, Broadcom, Marvell, and Astera on this week's AI bus tour. They initiated this visit because they wanted to witness NVIDIA's GB200 NVL firsthand, inquire about the company's advantages on this platform, and discuss the significance of this transformation for the entire ecosystem.

Curtis and his team emphasized the positive factors they discovered in NVIDIA's supply chain during their Asia trip in mid-May. They also noted that NVIDIA is requesting a capacity increase of approximately 25% by the second half of 2024, with Blackwell (NVIDIA's developed graphics processing unit microarchitecture) seeing a capacity increase of around 40%.

In their previous checks, analysts updated these transaction volumes but did not reflect this upward trend in their estimates as they wanted to further validate the accuracy of this data and understand how these changes would impact GB200 NVL.

After additional checks and incorporating feedback from the Fubon team, Jefferies now finds that the transaction volume of GB200 NVL is 60,000 (higher than the previous 40,000), with all transactions of NVL 36 increasing (NVL 36 at 50,000, NVL 72 at 10,000).

The analysts added that even with these higher numbers, their forecasts still fall more than $50 billion short of the bottom-up expectations for the 2025 fiscal year.

Jefferies' long-term view on NVIDIA is positive: analysts state that industry checks indicate further upside potential for the company, with the growth of Blackwell expected to accelerate performance in the 2026 fiscal year.

Analysts believe that with the proliferation of GB200, system sales will increase, further enhancing NVIDIA's competitiveness.

Jefferies analysts have raised their previously above-Wall Street expectations for the 2025 fiscal year revenue/earnings per share to $124 billion/2.82 dollars, and for the 2026 fiscal year revenue/earnings per share to $181 billion/4.23 dollars. This series of forecasts and actions demonstrate Jefferies' confidence in NVIDIA's future and the expectation that the company will continue to maintain its leadership position in artificial intelligence and chip manufacturing