Important Points
- Selling inside major technology stocks like NVIDIA, Meta Platforms, AMD, and Palantir reflects personal financial needs rather than a fundamental corporate meltdown.
- Institutions are buying shares of these AI-linked stocks at rates of $2 or $3 to $1 compared to insider sales, reflecting broad confidence among experts in the field.
- Rising analyst reports, strengthening sentiment, higher price targets, and upcoming earnings reports are all acting as potential headwinds to propel these stocks higher.
Insiders are selling big tech stocks, but investors should think twice about doing the same.
The insiders, all of whom have been around for years, most of them at least 10 years and some more than 20, benefit not only from stock-based compensation but have also received significant gains over the past few years.
Shares are similar NVIDIA (NASDAQ: NVDA), Meta Platform (NASDAQ: META), Advanced Micro Devices (NASDAQ: AMD), again Palantir (NASDAQ: PLTR) triple digits at that time, quadrupled over the long term, and will likely continue to climb as the year progresses. These measures can create practical reasons for insiders to sell: to lock in their profits, reallocate portfolios, and pay taxes.
But should investors follow in their footsteps? Here are three reasons why they shouldn’t.
Reason #1: The AI Buildout theme did not play Full
The AI bubble, which drives their businesses and stock prices, is far from over.
The worst case scenario is that the first phase—the build phase—hit demand when demand squeezed NVIDIA’s GPU supply, but we’re on our way past that problem.
At the moment, spending is moving to adjacent verticals, as newly designed GPU owners now need connectors, control units, sensors, and actuators, as well as racks to house them, shelter data centers, cooling systems to increase longevity, and all the cables and optics needed to connect them. And that’s not counting the infrastructure needed to get AI out of datacenters and running.
In this context, Advanced Micro Devices’ introduction of MI450 products and Helios rack-scale solutions reveals the need and use of data, making the whole complex higher at the end of the year and in time. NVIDIA and AMD GPUs are built on different architectures and use different manufacturing and advanced packaging solutions, so they face different constraints. AMD will certainly hit a wall of power in its ability to deliver GPUs, but it will take a few quarters at least to hit it.
Reason #2: Institutions Accumulate Big Tech
While insiders, from CEOs to CFOs, and their boards of directors sell shares, institutions buy them.
Institutional activity varies by stock, but InsiderTrades data shows institutions buying NVIDIA and AMD very quickly, in the $2 or $3-to-$1 range, and a similar trend for names like Meta Platforms and Palantir.
Neither Meta Platforms nor Palantir is involved in GPU production, and neither is what you would call an AI infrastructure stock, but both are important to the AI business, representing the monetization of AI and the power it brings.
Meta Platforms is among the first non-infrastructure stocks to go all in on AI, it’s been capitalizing frequently since 2022, and it’s showing results each time within certain timeframes. The visible results are increased traffic, increased engagement and improved ad metrics, especially in the number of ads displayed and the revenue per unit generated.
Palantir is another example of AI monetization, allowing governments and organizations to visualize large, complex data sets and make actionable decisions from them. The once mixed name is now entrenched, with institutions buying the stock at a $3-to-$1 pace during the 12-month trailing (TTM) period leading up to May and driving activity sequentially.
Reason #3: Analyst Development, Earnings Catalysts, and Chart Power Are Commanding
Analysts’ trends are good and, knowing that they are preaching to the choir of institutions, they are leading the market to very high levels.
The data reveals rising coverage on a TTM basis, strengthening sentiment, and rising target prices, which is a triple-tailwind for price action. The result is that Average Buy estimates have a strong bias, relying on Strong Buys, with price trends leading to a higher range. This means that the Magnificent Seven’s new all-time high and names like Advanced Micro Devices are well on their way to a trillion dollar valuation.
Moreover, the charts are very strong for these stocks. A few that haven’t hit new highs are in rebound mode, having established a base of support, and are on track to do so later this year.
A likely trigger is the upcoming earnings reports, with most of the Mag Seven expected to outperform their consensus estimates and provide guidance updates.
Of the four stocks listed here, Advanced Micro Devices stands to make the biggest move at the end of the year. Revenue growth will rise to the triple-digit range, possibly in Q3 but certainly in Q1 of next year, as its business is booming with NVIDIA-like metrics. In this case, the stock price can increase by 8x to 10x as it reaches NVIDIA’s valuation.
Companies in this article:
| Company | Current Price | Price Changes | Dividend Yield | The P/E ratio | Consensus ratio | Consensus Price Target |
|---|---|---|---|---|---|---|
| NVIDIA (NVDA) | $210.54 | -2.8% | 0.02% | 42.95 | Buy it | $275.25 |
| Microsoft (MSFT) | $427.88 | +0.7% | 0.85% | 26.76 | Buy Medium | $563.72 |
| Palantir Technologies (PLTR) | $142.05 | -0.7% | N/A | 225.58 | Buy Medium | $194.17 |
| Meta Platforms (META) | $669.42 | -1.4% | 0.31% | 28.50 | Buy Medium | $837.09 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
- Professional Background: Thomas Hughes is the Managing Partner of Passive Market Intelligence LLC, a market research platform he founded in 2023 with the motto: “We watch the market so you don’t.” He has worked as a blogger, stock market analyst, and independent analyst since 2010 and has been involved in trading and investing since 2005.
- Confirmation: He has an Associate of Arts in Culinary Technology-training that has enhanced his discipline, attention to detail, and ability to anticipate results, all of which continue in his work as a market analyst.
- Financial Experience: Thomas has been writing about finance and investing since 2011, when he discovered it could be more than a personal passion—it could be a career. He has been a contributing writer for InsiderTrades.com since 2019.
- Writing Focus: He specializes in the S&P 500, small-cap stocks, high-yield diversification strategies, consumer staples, retail, technology, oil, and equities. His analysis combines chart-based technical setups with key fundamentals, helping readers identify potential trends.
- How to Invest: Thomas takes a hybrid approach that combines technical analysis with in-depth fundamental research. He often writes about macroeconomic shifts, wage trends, and sentiment-based trading signals.
- Motivation: Thomas became interested in stocks after attending a seminar on buying and selling your own stocks. That experience opened his eyes to the power of the market and sparked a lifelong interest in investing.
- Fun fact: Thomas picked up a model railroad by accident a few years ago—and now he can’t stop using the railroad.
- Areas of Expertise: Technical and fundamental analysis, S&P 500, retail and consumer sectors, equities, market trends
Education
Associate of Arts in Culinary Technology
