Insiders Are Sending Critical Signals: Nvidia and Palantir's $12.8 Billion Selling Spree

Over the past three years, no technological trend has commanded investor attention quite like artificial intelligence. AI represents what could be the most transformative advancement since the internet’s emergence in the mid-1990s. Yet beneath the enthusiasm surrounding Nvidia and Palantir’s soaring stock prices lies a troubling message being sent by the people who know these companies best: their own insiders are dumping shares at an unprecedented rate.

The combined insider selling at these two AI powerhouses totals $12.83 billion since late January 2021. Nvidia insiders have disposed of $5.66 billion in stock, while Palantir insiders have shed $7.17 billion. That’s not just a warning sign—it’s a flashing red light that professional investors should not ignore.

Why Nvidia and Palantir Built Such Powerful Competitive Strongholds

The remarkable rise of both companies can be traced to their durable competitive advantages that have proven difficult for rivals to match. Nvidia’s dominance stems from its graphics processing units (GPUs), which power the vast majority of artificial intelligence data centers globally. These chips represent the computational brains behind advanced language models and split-second decision-making systems.

Nvidia’s lead isn’t accidental. The company benefits from first-mover advantage, but more importantly, from hardware superiority that competitors struggle to replicate. CEO Jensen Huang has committed to rolling out a new advanced GPU annually, with the upcoming Vera Rubin GPU set to debut later this year. The technological gap between Nvidia’s Hopper, Blackwell, and Blackwell Ultra architectures and what competitors can currently deliver remains vast.

Palantir’s competitive fortress takes a different form. The company’s power lies in its software-as-a-service platforms, Gotham and Foundry, which blend AI and machine learning into data analysis tools. Gotham serves as the company’s revenue backbone, providing intelligence services to the U.S. federal government and its allies for military planning and threat analysis. These multi-year government contracts provide predictable revenue streams. Foundry, the newer platform, helps enterprises decode their operational data and has demonstrated the capacity to drive sustained double-digit growth.

By virtually any measure, both companies have constructed competitive advantages that appear nearly impossible to dislodge. Yet something profound is happening beneath the surface.

The Insider Trading Pattern Sending Unmistakable Warning Signals

Here’s what makes the current situation so remarkable: despite these companies’ apparent invulnerability, the executives and board members who shepherd them have been relentless sellers.

According to SEC Form 4 filings—the official documents insiders must file within two business days of trading their company’s shares—the selling has been nearly one-directional. An insider, defined as a senior executive, board member, or 10%+ shareholder, is legally required to disclose these transactions. Over the past five years, such disclosures paint a striking picture.

For Nvidia, the last time an executive or board member bought shares on the open market was back in early December 2020. That’s nearly a six-year drought in insider purchases. Meanwhile, Palantir has seen minimal insider buying activity—just $7.8 million since late January 2021, and even those purchases came from a beneficial owner leveraging a pre-existing commercial agreement at favorable pricing.

While some insider selling reflects legitimate tax obligations tied to stock compensation, the near-complete absence of insider buying sends a crystalline message: the people running these companies don’t believe their stock prices are attractive at current levels.

The Valuation Metrics Sending Their Own Red Flags

The insider trading pattern aligns with troubling valuation signals. The price-to-sales (P/S) ratio has historically indicated bubble territory when exceeding 30 for industry leaders in transformational trends. Nvidia’s P/S ratio crossed that threshold in early November. Palantir’s situation appears even more extreme, recently trading at a P/S ratio near 100.

These metrics suggest that market expectations have become detached from fundamental valuations. When insiders from two of Wall Street’s most influential AI companies are net-selling rather than net-buying, and when valuation multiples have reached historically elevated levels, the combined message becomes difficult to ignore.

What the Insider Actions Truly Reveal

The absence of insider buying coupled with persistent insider selling is sending a clear, unambiguous signal: company leadership expects these stocks to face headwinds. People only purchase their company’s shares when they anticipate price appreciation. When that behavior stops almost entirely, it suggests the opposite expectation.

This phenomenon isn’t limited to isolated cases. The pattern extends across both companies and spans years, making it impossible to dismiss as coincidence or temporary market dynamics.

The Bottom Line for Investors

Stock Advisor’s analyst team recently identified their top 10 stock picks for the coming years—and notably, neither Nvidia nor Palantir made the cut. The reason warrants consideration. When insider actions are sending one message, valuation metrics another, and analyst recommendations a third, all pointing in the same direction, investors may be wise to pause and reassess their conviction in these positions.

The history of investing is littered with stories of great companies trading at unsustainable valuations. Sometimes the warning signals come in the form of falling earnings. Sometimes they arrive as rising competition. In this case, the warning is being sent through the actions of the people who know these businesses better than anyone: their own leadership teams.