Key Takeaways
- SoftBank sold its entire $7.6 billion Nvidia stake to fund AI investments
- The move sparked fresh AI bubble fears and market volatility
- Proceeds will support OpenAI, Stargate data center project
SoftBank Group has sold its entire $7.6 billion stake in AI chip giant Nvidia, triggering market concerns about a potential peak in artificial intelligence valuations. The Japanese tech investor offloaded 32.1 million Nvidia shares in October to finance CEO Masayoshi Son’s aggressive AI push centered around ChatGPT creator OpenAI.
Market Reaction and Bubble Concerns
The November 11 announcement jolted markets, with Nvidia shares falling 3.9% while SoftBank’s US depositary receipts rose 7.2%. The timing intensified investor worries about AI industry valuations outpacing fundamentals, especially after warnings from Morgan Stanley, Goldman Sachs CEOs, and short-seller Michael Burry’s bets against Nvidia.
“I can’t say if we’re in an AI bubble or not,” said SoftBank CFO Yoshimitsu Goto during earnings, explaining the sale was “so that the capital can be utilised for our financing.”
SoftBank’s Nvidia Trading History
Analysts noted SoftBank’s mixed record with Nvidia investments. The company reportedly missed over $100 billion in gains by selling Nvidia shares in 2019 before the AI boom, only to repurchase them later.
“As for timing, cannot say Masayoshi Son has been great with his trading of Nvidia shares. It appears simply resource allocation – finding funds to make bets elsewhere,” said Cantor Fitzgerald’s C.J. Muse.
Funding OpenAI and Major Projects
The Nvidia sale, combined with a $9.2 billion T-Mobile stake disposal, provides SoftBank with substantial capital for AI initiatives. This includes the $500 billion Stargate data-center project and up to $40 billion pledged to OpenAI.
“By cashing in now, he’s securing the capital needed to double down on his conviction in AI applications and the super-scaled infrastructure behind them,” said Running Point Capital’s Michael Ashley Schulman.
OpenAI Focus and Financial Impact
SoftBank’s growing OpenAI bet comes with risks, linking the company to circular deals fueling bubble concerns. However, OpenAI’s rising valuation has already boosted SoftBank’s performance, contributing to a surprise second-quarter net income of 2.5 trillion yen ($21 billion) – far exceeding analyst estimates.
OpenAI’s value has increased $14.6 billion since SoftBank’s investment, though the startup hasn’t detailed how it will fund its $1.4 trillion AI infrastructure plans. The company expects $20 billion in annual recurring revenue and is considering a $1 trillion public listing as early as 2026.
“The Vision Fund’s chequered past certainly lends an air of high-stakes poker to this divestment,” Schulman noted.
