Employer guide · Nvidia
Nvidia RSUs: How to Diversify a Concentrated NVDA Position Without a Tax Disaster
By Matthew Lewis, CFP®, CFA | Updated September 25, 2026
If you've been at Nvidia for a few years, your RSUs may have quietly become the largest thing you own. Every quarter another batch vests and lands in your stock plan account. Given how NVDA has performed, selling rarely felt urgent. Now the position is a majority of your net worth, and your oldest shares carry large gains. Selling feels like writing a check to the IRS. Holding feels like betting your future on one stock.
This guide is for that situation. We start with a short primer on how Nvidia RSUs work and how they're taxed. Then we turn to the harder question: how to reduce a concentrated NVDA position without triggering an avoidable tax bill, using only the strategies Nvidia's own policies allow.
Key takeaways
When Nvidia RSUs vest, their full market value is taxed as ordinary income, and that value becomes your cost basis. The default 22% federal withholding often isn't enough for Nvidia employees in higher brackets.
Each vest creates a separate tax lot with its own basis and holding period. Knowing your lots is the starting point for selling efficiently.
Nvidia's insider trading policy prohibits hedging (including collars and prepaid forward contracts), pledging NVDA as loan collateral, and holding it in a margin account. Many standard concentrated-stock strategies are therefore unavailable to you.
The tools that remain work well when combined: a planned multi-year selling schedule (often run through a 10b5-1 plan), careful lot selection, donating appreciated shares under the 2026 charitable rules, exchange funds with Nvidia Legal's approval, and, for some, a move out of California.
Sequence matters: first stop the position from growing, then sell the shares that cost the least in tax, then work down the rest on a schedule.
Nvidia RSUs in 90 seconds
What an RSU is
A restricted stock unit is Nvidia's promise to give you a share of NVDA in the future, provided you're still employed when the unit vests. Until then, you own nothing. You can't sell, vote, or collect dividends, and unvested units are generally forfeited if you leave. Once a unit vests, it becomes an ordinary share in your account, and you can hold or sell it like any other stock, subject to Nvidia's trading policies.
How Nvidia RSUs vest
Nvidia RSUs vest quarterly, typically over four years. The exact schedule depends on when you were hired, because Nvidia has changed its vesting structure over time. Your grant agreement in your stock plan account shows the schedule for each grant. Most long-tenured employees also receive annual refresh grants, each with its own vesting schedule. That's why the shares keep arriving every quarter, and why a position can grow large without any deliberate decision to buy.
What happens when your RSUs vest
On each vest date, the market value of the vested shares is added to your W-2 as wages. It's taxed like salary: federal and state income tax, plus Social Security (until you reach the annual wage cap) and Medicare, including the additional 0.9% Medicare tax on wages above $200,000.
To cover the taxes, Nvidia keeps some of the vested shares and pays the taxes on your behalf. For federal income tax, it withholds at a flat 22% on up to $1 million of supplemental wages in a calendar year, and 37% on the amount above $1 million. California employees also typically have 10.23% withheld for state income tax, plus 1.3% for State Disability Insurance. You receive the remaining shares in your account. Because nothing is sold for you at vest, no sale appears on your tax forms until you sell shares yourself.
The withholding gap
The 22% federal rate is a withholding convention, not your actual tax rate. Many Nvidia employees are in the 32%, 35%, or 37% federal bracket, so each vest can leave a shortfall.
Example: $200,000 of RSUs vest for an employee in the 35% bracket. Nvidia withholds $44,000 (22%) for federal income tax, but the actual federal tax on that income is $70,000. The $26,000 difference comes due at tax time.
A shortfall can also trigger an IRS underpayment penalty, but that's avoidable. You won't owe a penalty if your withholding and estimated payments cover at least 90% of this year's tax, or 100% of last year's (110% if your prior-year AGI was over $150,000). You can close the gap with quarterly estimated payments or by increasing your paycheck withholding on a new W-4.
Your cost basis, and why it matters later
Because you've already paid income tax on the vest value, that value becomes your cost basis. Selling at the vest price produces no additional tax. Selling above it produces a capital gain: short-term if you've held the shares a year or less, long-term if more.
Each quarterly vest is a separate lot with its own basis and holding period. After several years at Nvidia, you may own dozens of lots. Some have large gains, some small gains, and after a price decline some may even show losses. As you'll see below, that variety is one of your most useful tools for diversifying at the lowest tax cost.
One caution: when you sell RSU shares, the Form 1099-B you receive can report a cost basis that is too low, sometimes zero. That happens when the broker doesn't include the income already taxed on your W-2. If you file using that number, you pay tax on the same income twice. Always compare it against your broker's supplemental statement.
How RSUs fit with your other Nvidia benefits
RSUs are one part of Nvidia's compensation package. The employee stock purchase plan adds more NVDA to your holdings, and your 401(k) may hold more through index funds. For details on the ESPP, the 401(k) match, and the mega backdoor Roth, see our guide to Nvidia employee benefits. For the rest of this guide, we focus on what to do once your RSU shares have added up to more NVDA than you should own.
Why a concentrated NVDA position is riskier than it feels
Holding NVDA has been richly rewarded, and that's exactly what makes diversifying hard. The case for reducing your position isn't a prediction that the stock will fall. It's about what would happen to your plans if it did, and whether you could afford to wait for a recovery.
Great companies still have deep drawdowns
Nvidia has lost more than half its value several times:
From October 2007 to November 2008, the stock fell 85%, and it didn't regain its prior peak until April 2016.
From October 2018 to December 2018, it fell 56%.
From November 2021 to October 2022, it fell 66%.
In early 2025, after peaking in January, the stock fell 35% amid trade tensions and questions about how long AI infrastructure spending would last. That period included January 27, 2025, when the stock fell about 17% in a single day.
Losses and gains aren't symmetrical. After a 66% decline, the stock has to nearly triple (a gain of about 194%) just to get back to where it started. Nvidia recovered from each of these drawdowns, but recovery took anywhere from months to more than seven years. If you need the money for a home purchase, tuition, or retirement during a drawdown, you may be forced to sell near the bottom.
Your paycheck is already a bet on Nvidia
Your salary, your unvested RSUs, your future refresh grants, your ESPP purchases, and your job security all depend on the same company. A downturn that hits NVDA's stock price is also likely to be a hard time for Nvidia as an employer. When that happens, your unvested RSUs lose value at the same moment your brokerage account does. Your real exposure to Nvidia is larger than your account statement shows.
Your "diversified" funds hold Nvidia too
Nvidia is now the largest company in the major U.S. stock indexes. As of September 24, 2026, NVDA made up 8.19% of the S&P 500 and 8.17% of QQQ, the Nasdaq-100 fund. So $1 million in an S&P 500 index fund includes about $82,000 of NVDA, on top of whatever shares you already hold directly. Many other large holdings, such as other chipmakers and the cloud companies that buy Nvidia's products, tend to rise and fall with the same AI demand. Diversifying out of NVDA and into a broad index fund reduces your concentration, but less than you might expect.
How concentrated are you?
[Concentration calculator: NVDA holdings ÷ investable assets]
To estimate your concentration, add up your vested RSU shares, ESPP shares, and any NVDA you hold in other accounts, then divide by your total investable assets. Count unvested RSUs separately. They aren't yours yet, but they add to your exposure.
A 30-minute video call with an advisor who works with Nvidia employees on RSUs, taxes, and concentrated stock.
Book a fit meetingThese ranges are TechView's framework, not an industry standard. The dollar amount matters too: 40% of $300,000 and 40% of $6 million call for very different strategies.
What Nvidia's insider trading policy allows, and forbids
Most articles on concentrated stock recommend strategies you can't use. Nvidia's insider trading policy is filed publicly with the SEC, and it applies to all NVIDIA employees, board members, contractors and consultants, not just executives. If a third party trades on your behalf, such as a financial advisor, you are responsible for making sure they follow the policy. secsec
What's prohibited at all times
These restrictions apply regardless of whether you have material non-public information or whether a trading window is open: sec
Options and other derivatives. You may not trade in derivatives of NVIDIA securities, including call and put options. That rules out protective puts and covered calls. sec
Hedging and shorting. The policy prohibits any form of hedging involving NVIDIA securities, including equity swaps, prepaid forward sale contracts, collars, straddles, or similar instruments, as well as shorting NVIDIA. That rules out collars, prepaid variable forwards, and "shorting against the box." sec
Margin. You may not purchase NVIDIA securities on margin or hold them in a margin account. sec
Pledging. You may not pledge NVIDIA securities as collateral for a loan. That rules out a securities-backed line of credit against your NVDA. sec
Single-stock ETFs. Trading a single-stock ETF is treated as trading in that company's securities, so leveraged or inverse NVDA funds aren't a workaround. sec
Designated Individuals and trading windows
Most Nvidia employees aren't subject to trading windows. They can sell at any time, as long as they don't have material non-public information. Some employees have more restrictions:
Designated Individuals. Employees whose work involves access to potentially material financial information check their status using the DI Trading Restriction Status Tracker. A Designated Individual may not trade in or gift NVIDIA securities during the quarterly closed window, which starts five weeks prior to the end of the fiscal quarter and generally reopens on the 2nd trading day after earnings are announced, other than through a 10b5-1 plan. Given Nvidia's fiscal calendar, that typically leaves about a month each quarter to trade. sec
Special restrictions. Even if you are not a Designated Individual, NVIDIA may impose a special trading restriction if you become aware of non-public information that raises a risk of insider trading, and Legal will notify you if it applies. sec
Officers and directors. Section 16 directors and officers must obtain preclearance from Corporate Legal for any transaction in NVIDIA stock. sec
What the policy explicitly permits
10b5-1 plans. Trades under a 10b5-1 plan already in effect may execute even while you possess MNPI or during a closed window. sec
RSU tax withholding and the ESPP. Nvidia's automatic share withholding at vest and ESPP purchases may occur even during a closed window. sec
Exchange funds. Investing NVIDIA stock in an exchange fund may be permitted case by case if the fund is broadly diversified. You must contact Corporate Legal in advance for review and approval. sec
Diversified funds. You may trade mutual funds and non-single-stock ETFs that contain NVIDIA stock. sec
Estate-planning gifts. Gifts to family members or a trust you control may be made during a closed window if you keep beneficial ownership, the recipient follows the policy, and you have no reason to believe the recipient intends to sell during the closed period. A gift to charity or a donor-advised fund is irrevocable, so this exception doesn't cover it. Designated Individuals should plan charitable gifts of NVDA for open windows.
investable assets
The tools that remain are selling well, giving strategically, exchange funds, and lowering the tax cost of each sale through lot selection, timing, and state residency. The rest of this guide covers how to combine them.
These restrictions apply while you work at Nvidia. If you leave, more options may become available, although insider trading laws still apply whenever you have material non-public information. This summarizes Nvidia's public policy and isn't legal advice. Check any specific transaction with Corporate Legal.
Know your tax bill before you sell a share
For most Nvidia employees, the biggest obstacle to diversifying isn't the stock market. It's the tax on the gains. But that tax isn't a single number. It depends on which shares you sell, when you sell them, and where you live when you do. Getting those choices right can cut the cost of diversifying by hundreds of thousands of dollars.
Start with a lot inventory
As covered above, every quarterly vest is a separate tax lot with its own cost basis (the share price on the vest date) and its own holding period. Your stock plan account lists them. Put them in a spreadsheet with four columns: vest date, number of shares, cost basis per share, and whether the lot is short-term (held a year or less) or long-term.
After several years at Nvidia, you'll see a wide range. Shares that vested in 2019 or 2020 have a basis of a few dollars per share on a split-adjusted basis, so nearly all of their value is taxable gain. Shares that vested in the last year have a basis close to today's price, so selling them triggers very little tax.
What you'll pay
For a California resident in the top brackets, the combined tax on gains is roughly:
California taxes all capital gains as ordinary income, with no lower rate for long-term gains. Its top rate of 13.3% includes the 1% surcharge on income over $1 million. The 3.8% net investment income tax applies to married couples with modified AGI over $250,000, or $200,000 for single filers. If your income is lower, your rates will be lower, but the principles below still apply.
Which shares you sell matters more than when
Suppose you hold $3 million of NVDA and want to sell $1 million this year. Here's the estimated tax depending on which lots you sell (hypothetical, at a share price of about $225):
Even though short-term gains are taxed at the higher 54.1% rate, the newest shares are the cheapest to sell because they have so little gain. Selling the oldest lots first costs over $250,000 more in tax to accomplish exactly the same diversification.
That's why the default matters. Many brokerage accounts default to "first in, first out," which sells your oldest, most appreciated shares first. Before you sell, choose the lots yourself (specific identification) or set the account's default method to sell the highest-cost shares first. Make the choice at the time of the sale; you can't change it afterward.
Your lowest-basis lots aren't wasted. They're the best shares to donate to charity, which is covered in the section on charitable strategies, and potentially to contribute to an exchange fund.
Watch the wash sale rule
If any of your lots show a loss, selling them can offset gains elsewhere. But if you buy shares of the same stock within 30 days before or after selling at a loss, the loss is disallowed under the wash sale rule. RSU vests and ESPP purchases are generally treated as purchases for this purpose. Because new NVDA shares arrive every quarter, loss sales need to be timed to avoid the 30 days on either side of a vest or ESPP purchase date.
Plan for the tax bill itself
A large sale creates a large tax bill, and no withholding covers it. Set the tax aside in cash or short-term Treasuries when you sell. As covered earlier, paying at least 110% of last year's tax through withholding and estimated payments protects you from underpayment penalties. The balance is still due in April.
The structured de-risking timeline
The question most concentrated Nvidia employees ask is "when should I sell?" A better question is "what rules will I follow?" Nobody knows where NVDA will trade next quarter. A schedule decided in advance takes the guesswork, and much of the regret, out of the process. It also spreads gains across several tax years, which often lowers the total tax.
Phase 0: Stop the position from growing
Before selling anything you already own, stop adding to the problem. Sell each new RSU vest soon after it arrives. With a basis close to the current price, those shares cost little or nothing in tax to sell, and your concentration stops growing every quarter. The ESPP is different: its 15% discount is too valuable to give up, so keep participating but sell the purchased shares promptly.
Phase 1: The first 90 days
Build your lot inventory and calculate your current concentration.
Set a target. For example: below 20% of investable assets within two years, and below 10% within three to four.
Sell the cheapest shares first: any lots at a loss (watching the wash sale window) and lots that vested in the last 12 months.
Build a reserve: set aside cash for taxes, an emergency fund, and any major expense in the next three years, such as a home purchase or tuition. Money you'll need soon shouldn't depend on NVDA's share price.
Decide how you'll carry out the plan: a 10b5-1 plan, or a written set of rules you follow yourself.
Phase 2: Years one through four
Set a yearly tax budget. Decide how much gain you're willing to realize each year, and sell long-term lots in order of highest basis first until you reach it.
Sell on a schedule, not on predictions. A simple rule is to sell a fixed percentage of the remaining position every quarter. Adding price bands, such as selling extra when the stock rises above a set price, lets you take advantage of strength without pausing the plan when the price falls.
Use the tax calendar. A sale in December falls in one tax year and a sale in January in the next. Splitting large sales across the year-end can keep more of the gain out of the highest brackets.
Coordinate with giving and loss harvesting. In your biggest sale years, donate your lowest-basis shares and harvest losses elsewhere in your portfolio. Both are covered in the sections that follow.
Phase 3: The residual position
Once you reach your target, what's left is a position you hold by choice: a size you could watch fall by half without it changing your plans. Keep your lowest-basis lots here. They're the most expensive to sell and the most valuable to donate.
A sample calendar
Nvidia's fiscal quarters end in late January, April, July, and October, and earnings are typically released about four weeks later. For a Designated Individual, trades happen in the open windows that follow each earnings release or through a 10b5-1 plan. A typical year might look like this:
10b5-1 plans: who at Nvidia needs one, and who just wants one
A Rule 10b5-1 plan is a written plan to sell stock in the future, adopted at a time when you don't have material non-public information. It specifies how many shares to sell and when, or a formula for deciding, and your broker carries it out without further input from you. If you're ever accused of trading on inside information, a properly adopted and followed plan gives you an affirmative defense.
Nvidia's policy allows trades under a 10b5-1 plan already in effect to execute even while you possess MNPI and/or during an applicable closed trading window. Employees must follow NVIDIA's Rule 10b5-1 Trading Plan Guidelines, which are internal to Nvidia, so check the requirements with Corporate Legal before adopting a plan.
Who needs one
Designated Individuals and officers. If you can trade only during open windows, a plan is the most reliable way to keep a multi-year selling schedule on track. It lets sales happen every quarter, including during closed windows, and removes any question about timing.
Everyone else. Most Nvidia employees can sell whenever they don't have MNPI, so a plan is optional. It can still be worth having for discipline, since it removes the temptation to wait for a better price, and as protection: if you're ever placed under a special trading restriction, a plan already in place keeps selling.
The rules since 2023
The SEC tightened its 10b5-1 rules in 2023:
Cooling-off period. No trades may happen until a waiting period after adoption has passed: 30 days for most employees. For officers and directors it's the later of 90 days or two business days after the company files its financial results for the quarter the plan was adopted, up to a maximum of 120 days.
No overlapping plans. You generally can't have more than one plan covering open-market sales at the same time.
One single-trade plan per year. A plan designed to execute a single trade can be used only once in any 12-month period.
Good faith. You must adopt and operate the plan in good faith. Officers and directors must also certify that they don't have MNPI when adopting.
Changes restart the clock. Changing the amount, price, or timing of trades counts as ending the plan and starting a new one, with a new cooling-off period.
The tradeoffs
A 10b5-1 plan sells on schedule regardless of what happens, which is the point, but also the cost. You can't pause because of a strong earnings report or accelerate because you're worried. Frequently ending and restarting plans can undermine the good-faith protection they provide. Plans work best when the schedule is designed well from the start: a steady quarterly sale, price bands if you want them, and a length of 12 to 24 months before you revisit it.
Making a plan tax-efficient
A 10b5-1 plan controls when shares are sold, not which ones. Unless you set it, the broker may sell your oldest, lowest-basis shares first. Before the plan starts, set the account's default cost basis method to sell the highest-cost shares first. That way, the lot selection strategy from the tax section is built into every automatic sale.
Items to check before publishing:
Lot table math. The basis percentages are illustrative, based on NVDA's approximate prices one and two years ago and in 2019 to 2021. The tax figures are the gains multiplied by the combined rates. Label the table clearly as hypothetical, as the heading does.
Wash sale treatment of RSU vests. The IRS hasn't ruled explicitly that an RSU vest counts as a purchase, which is why the draft says "generally treated." Most practitioners treat it that way, and it's the safer assumption.
Cost basis method. Confirm which options Nvidia's stock plan broker offers ("highest cost," "tax-efficient," or specific identification only). You can add the exact setting to the page once confirmed.
"About four weeks later" for earnings is typical of Nvidia's calendar but varies by quarter.
Rates as of 2026. The 20% federal long-term rate and 37% top ordinary rate are as of 2026, and California's 13.3% rate and the NIIT thresholds haven't changed. Recheck them at each annual update.
Charitable strategies: donor-advised funds, bunching, and charitable remainder trusts
If you already give to charity, your NVDA shares are the most tax-efficient way to do it. A gift of appreciated shares reduces your concentration, avoids the capital gains tax on those shares entirely, and still earns a charitable deduction. For an Nvidia employee with large embedded gains, it's the closest thing to a tax-free sale.
Give shares, not cash
When you donate shares you've held for more than a year, you generally deduct their full market value and never pay tax on the gain. Shares held a year or less are different: for those, the deduction is generally limited to your cost basis. That's why the shares to give are your oldest, lowest-basis lots, the same ones that are most expensive to sell.
Example: You plan to give $100,000 to charity this year, and you also plan to sell NVDA to diversify. You own a lot that vested in 2020, now worth $100,000, with a cost basis of $8,000. (Assumes a California resident in the top brackets, using the rates from the tax section.)
| Write a check, sell the NVDA | Donate the NVDA, keep the cash | |
|---|---|---|
| Given to charity | $100,000 | $100,000 |
| NVDA position reduced by | $100,000 | $100,000 |
| Capital gains tax on the $92,000 gain | $34,132 | $0 |
Illustration only, for a California resident in the top brackets. Not a projection of any client's results.
The charity receives the same amount, your NVDA position shrinks by the same amount, and your charitable deduction is the same. The only difference is $34,132 of tax you don't pay. The $100,000 you would have donated in cash stays with you, already diversified.
Give the shares directly, by transferring them from your brokerage account to the charity or donor-advised fund. If you sell them first and donate the proceeds, you owe the tax.
What changed in 2026
The One Big Beautiful Bill Act changed charitable deductions starting with the 2026 tax year. For itemizers, only giving above 0.5% of AGI is deductible, and for the top 37% bracket, each dollar of deduction is worth at most 35 cents in tax savings. With AGI of $1,000,000, the first $5,000 of your gifts isn't deductible.
Some rules didn't change. Gifts of appreciated stock can still be deducted up to 30% of AGI, and you can carry forward any excess for up to five years. Carried-forward amounts are subject to the 0.5% floor again in the year you use them.
These are federal rules. California hasn't adopted them, so your state deduction follows California's own rules.
Bunch several years of giving into one year
Because of the new floor, giving the same amount every year now costs you a nondeductible slice every year. Bunching several years of planned giving into a single year means paying the floor once instead of several times.
A donor-advised fund makes bunching practical. You take the full deduction in the year you contribute, then recommend grants to your chosen charities over the following years. You could contribute five years of giving to a donor-advised fund in one year, deduct it that year, and keep supporting the same charities on your usual schedule.
The best year to bunch is usually your biggest sale year. Large sales raise your AGI, which raises the 30% limit and lets you deduct a larger gift of stock. The deduction also offsets income taxed at your highest rates. The floor rises with AGI too, but at 0.5%, that's a small cost next to the benefit.
Charitable remainder trusts for large positions
If you have a large position and a genuine intent to leave money to charity, a charitable remainder trust (CRT) can diversify much more of it:
You transfer low-basis NVDA shares into the trust.
The trust sells the shares and reinvests in a diversified portfolio. Because the trust is tax-exempt, it pays no capital gains tax on the sale.
The trust pays you (or you and your spouse) a set percentage of its value each year, for life or for a term of up to 20 years.
When the trust ends, what remains goes to charity. By law, the charity's expected share must be at least 10% of the initial contribution.
You receive a charitable deduction in the year you fund the trust, based on the present value of what charity is expected to receive. The payments you receive are taxed as they come out, and much of the original gain is eventually taxed through them, but spread over many years instead of all at once.
A CRT is irrevocable and involves legal and administrative costs, so it generally makes sense only for positions of $1 million or more and for people who would leave money to charity anyway. It's a tool for diversifying with charitable intent, not a way to avoid taxes.
Timing and Nvidia's rules
Designated Individuals: Nvidia's policy bars Designated Individuals from making gifts of NVDA during a closed window. The exception for estate-planning gifts requires that you keep beneficial ownership, which isn't the case with a gift to charity. Make charitable gifts of NVDA, including contributions to a donor-advised fund or a charitable remainder trust, during an open window.
Material non-public information: Don't give shares while you have material non-public information. If the charity sells the shares, the gift can raise the same concerns as a sale.
Year-end deadlines: Share transfers take days, and brokers and donor-advised fund sponsors are busiest in December. To count for this year, start a December gift early in the month.
Nvidia's matching gifts: The NVIDIA Foundation matches employees' donations of time and money up to $10,000 per year. Check whether gifts of stock or grants from a donor-advised fund qualify, since many employer matching programs exclude them.
Items to check before publishing:
The 35% cap is a simplification. The law actually reduces itemized deductions by 2/37 of the lesser of total itemized deductions or income above the 37% bracket threshold. "Worth at most 35 cents" is accurate for readers in that bracket.
California non-conformity. I'm confident California hasn't adopted the new floor and cap, because its tax code follows the federal code as of 2015. Confirm this before publishing, since a reader could act on it.
Gifts while holding MNPI. The SEC has treated gifts made while aware of material non-public information as potentially violating insider trading rules. The draft doesn't cite a source for this, so keep the wording as guidance.
CRT figures. The 10% minimum remainder and 20-year term limit are standard rules I stated from knowledge. Payout rates must be between 5% and 50%; I left that detail out of the draft.
Matching gifts. The NVIDIA Foundation's site says up to $10,000 per year. An older guidelines document showed lower amounts, so the site is the current source.
Other ways to lower the tax cost
Selling well and giving strategically do most of the work. Four more tools can lower the tax cost further, depending on your situation.
Harvest losses in the rest of your portfolio
Investing your sale proceeds in individual stocks, through what's called direct indexing, instead of a single index fund lets you sell the stocks that fall below what you paid. Those losses offset the gains from your NVDA sales. Losses you can't use in a year carry forward indefinitely, and up to $3,000 a year can offset ordinary income.
For Nvidia employees, two details matter:
Exclude NVDA and closely related stocks from the direct-indexing portfolio. Otherwise you're buying back the concentration you're working to reduce. Most direct-indexing providers let you exclude individual stocks, and some let you exclude whole industries such as semiconductors.
Harvesting works best with new money. Losses are most plentiful in the first few years, while recent purchases are still close to their cost. Each new NVDA sale adds fresh proceeds to invest, which keeps generating loss opportunities over a multi-year plan.
Nvidia's trading policy doesn't restrict any of this, because none of it involves NVDA itself.
Exchange funds
An exchange fund lets you contribute your NVDA shares to a partnership in exchange for a share of a diversified pool of stocks contributed by many investors. No tax is due on the exchange. After about seven years, you can withdraw a diversified basket of stocks, still with your original cost basis, so the tax is deferred until you sell those stocks.
The tradeoffs are significant:
Lockup. Your money is tied up for roughly seven years. Leaving early generally means getting your NVDA shares back, not the diversified basket.
Eligibility and minimums. Most exchange funds require you to be an accredited investor or a qualified purchaser, and minimums are often $500,000 or more.
Fees. Annual fees are higher than for an index fund.
Nvidia's approval. As covered in the policy section, contributing NVDA to an exchange fund requires advance review and approval by Nvidia's Corporate Legal team, and the fund must be broadly diversified.
An exchange fund makes sense mainly for a large, very low-basis position you don't need to touch for years.
Gifts to family
Giving shares to family members in lower tax brackets, such as adult children or parents, can lower the tax on a sale. The recipient takes over your cost basis and holding period. If their income is low enough, they may pay 15% or even 0% federal tax on the gain when they sell, and less California tax than you would.
In 2026, you can give $19,000 per recipient ($38,000 for a married couple) without using any of your lifetime exemption. Larger gifts require a gift tax return, and the amount above the annual exclusion reduces your $15 million lifetime exemption. Actual gift tax is rare.
Some cautions:
The kiddie tax. Investment income of children under 19, or full-time students under 24, above a modest threshold is taxed at the parents' rate. Gifts to minor children rarely save tax for that reason.
It's a gift. The shares belong to the recipient, who decides what to do with them.
Nvidia's rules still apply. Designated Individuals should generally make gifts to family during open windows. Family members who live with you are covered by the trading policy too.
Leaving California
California taxes capital gains as ordinary income, at up to 13.3%. Texas and Florida have no state income tax. On a $2 million gain, the difference is about $266,000.
How California taxes you after a move:
Shares you already own are generally taxed by the state where you live when you sell them. Sell after becoming a genuine resident of another state, and California generally can't tax the gain.
RSUs that vest after you move are different. California taxes the portion of each vest that corresponds to the days you worked in California between the grant date and the vest date. Moving doesn't erase California's claim on equity you earned there.
The move must be real. California's Franchise Tax Board closely examines large sales shortly after a move. You need to establish your new home, with property, family, driver's license, voter registration, and where you actually spend your time, before selling.
A move should make sense for your life and career first. For employees who are already considering it, the timing of large NVDA sales relative to the move can be worth a great deal.
Holding some shares for life
When you die, your heirs' cost basis in shares you own generally steps up to the market value at your death, so the gain built up during your lifetime is never taxed. In community property states such as California, both halves of a married couple's community property generally step up when the first spouse dies.
This is rarely a reason to stay concentrated. It is a reason to hold your residual position, the shares left after you've reached your target, in your lowest-basis lots, and to keep the shares you don't need to sell or give.
Reinvesting the proceeds without re-concentrating
Selling NVDA is only half of diversifying. Where the money goes next determines whether your risk actually falls. Many Nvidia employees sell NVDA and buy funds or stocks that rise and fall with the same AI spending, ending up less concentrated on paper than in practice.
Know what's already in your funds
As covered earlier, NVDA is about 8% of the S&P 500 and of the Nasdaq-100. Many of the other largest holdings in those indexes depend on the same trend: chipmakers such as AMD and Broadcom, suppliers such as TSMC, and the cloud companies whose spending on data centers drives demand for Nvidia's products. Even an emerging markets fund isn't free of the overlap, since TSMC is one of its largest holdings.
| Investment | Nvidia and AI exposure |
|---|---|
| S&P 500 index fund | About 8% NVDA, plus large weights in other chipmakers and cloud companies |
| Nasdaq-100 fund | About 8% NVDA, with an even heavier technology weighting |
| Equal-weight S&P 500 fund | About 0.2% NVDA, the same as each of the other 499 companies |
| International developed markets fund | No NVDA; some exposure through companies such as ASML |
| Emerging markets fund | No NVDA, but TSMC, a key Nvidia supplier, is one of its largest holdings |
| U.S. small-company fund | No NVDA; limited AI exposure |
| High-quality bond fund | None |
Fund weights change over time. Figures are approximate as of September 2026.
None of these is wrong. A broad index fund is still far more diversified than a single stock. The point is to choose your new holdings knowing how much Nvidia and AI exposure you're buying back, especially while you still hold NVDA, receive new RSUs, and depend on Nvidia for your paycheck.
Build the portfolio around a target, not around NVDA
Decide on a long-term allocation for your whole portfolio first, including stocks, bonds, and cash, based on your goals and when you'll need the money. Then fill it in, counting your remaining NVDA as part of your U.S. large-company stock allocation. A common approach for a Nvidia employee mid-way through a diversification plan is to underweight U.S. technology and large-growth stocks and overweight the areas that move least like Nvidia: international developed markets, smaller U.S. companies, value stocks, and high-quality bonds.
Once your target is set, rebalance once a year. When rebalancing calls for trimming a position that has grown, consider donating appreciated shares rather than selling them, as covered in the charitable strategies section.
Don't wait to reinvest
Selling NVDA and investing the proceeds the same day keeps you invested in the stock market throughout; you're only changing what you own. Waiting for a better moment to buy back in is a separate market-timing decision, and it usually works against you. The exception is money you've set aside for taxes or near-term spending, which belongs in cash or short-term Treasuries.
Put each investment in the right account
Where you hold each investment matters almost as much as what you hold, especially for a California household in the top brackets:
Taxable brokerage account: broad stock index funds or a direct-indexing portfolio. They generate little taxable income, and you can harvest losses here.
401(k) and traditional IRA: bonds and other investments that produce income taxed at ordinary rates.
Roth accounts, including Nvidia's mega backdoor Roth: the investments you expect to grow the most, since that growth is never taxed.
Cash and bonds in a taxable account: U.S. Treasury interest isn't taxed by California, and California municipal bonds are exempt from both federal and California tax. For top-bracket California residents, either often beats a regular money market fund or corporate bonds after tax.
For details on the 401(k) match and the mega backdoor Roth, see our guide to Nvidia employee benefits.