Japan’s SoftBank Group Corp. on Tuesday said it had sold all its stake in Jensen Huang’s Nvidia, pocketing a massive $5.83 billion with the sale, as the Masayoshi Son-led company looks to increase its AI bet significantly.
Tokyo-based SoftBank Group’s sale of the Nvidia stake not only reflects a shift of focus on OpenAI but also highlights its positive outlook on AI investments at a time when investors are questioning the sheer amounts of capital chasing a technology with uncertain future returns.
SoftBank has however continued to focus on its AI investments, putting in tens of billions of dollars in OpenAI.
In February, the company’s Chairman Masayoshi Son joined Donald Trump, Sam Altman of OpenAI and Larry Ellison of Oracle to invest $500 billion in an artificial intelligence project called Stargate.
The Nvidia stake sale highlights how Son needs liquid money to invest in a plethora of projects including Stargate data centres and AI robot manufacturing sites in the US.
Shares of Nvidia plunged 1.3% in pre-market trading on Tuesday following the stake sale.
SoftBank’s Nvidia exit comes amid AI debate
SoftBank’s exit from Nvidia comes at a time when there is a growing debate among market participants whether large spendings by big tech companies such as Meta Platforms and Alphabet, pegged at over $1 trillion in coming years, will actually produce better returns.
SoftBank is keen to become a leading player in that growing ecosystem, with plans to leverage stakes in sector linchpins from OpenAI to US chip designer Ampere Computing.
SoftBank’s relation with Nvidia still remains strong though. While the Japanese company still invests in ventures use Nvidia’s technology heavily, the stake sale would mean SoftBank would have new venues to direct the money at.
SoftBank posts record profit
SoftBank’s Nvidia stake sale and its ‘all in’ bet on OpenAI come as the company reported a surprise net income of 2.5 trillion yen ($16.2 billion) in the second quarter of this fiscal. This was way above the average of analyst estimates of ¥418.2 billion, Bloomberg reported.
Its sales for the six month period rose 7.7% year-on-year to 3.7 trillion yen ($24 billion).
This is not the first time SoftBank has sold Nvidia stake, having done it once in 2019. However, since 2020, it started buying small shares of Nvidia. It disclosed that it increased its stake in the US chipmaker to around $3 billion at the end of March. That has paid out well as Nvidia valuation has risen by $2 trillion since then making it the first $5 trillion company in history.
This, along with the rally in OpenAI, has led SoftBank increase its profits in Q2.
OpenAI’s value has risen $14.6 billion since SoftBank invested, Chief Financial Officer Yoshimitsu Goto said.
SoftBank stocks have nearly doubled in value in the past year. They gained nearly 2% on Tuesday.
#SoftBank #sells #Nvidia #stake #billion #fund #investments #shareholders
