SoftBank Divests Nvidia Stake, Sets Its Sights on $30B OpenAI Initiative

Post by : Bianca Suleiman

In a significant strategic shift, SoftBank Group Corp. has completely sold off its holding in Nvidia Corp., yielding a staggering $5.8 billion. This decision underscores founder Masayoshi Son's determination to redirect company efforts towards artificial intelligence.

By March's conclusion, SoftBank had ramped up its investment in Nvidia to nearly $3 billion. The sale, compounded by profits from its Vision Fund investments, allowed the Tokyo-based enterprise to report an extraordinary net income of ¥2.5 trillion ($16.2 billion) in its fiscal second quarter, far surpassing analysts’ predictions of ¥418.2 billion.

Additionally, SoftBank shared plans for a 4-for-1 stock split effective January 1, intended to enhance liquidity and attract shareholders.

Son’s firm now holds positions in pivotal AI players like OpenAI and Oracle Corp., bolstering SoftBank’s financial standing and driving a remarkable 78% increase in its stock price over the last three months—marking its strongest quarterly growth since 2005.

Looking ahead, SoftBank is intensifying its focus on AI and semiconductor ventures. Discussions are underway for a $30 billion investment in OpenAI, in collaboration with Taiwan Semiconductor Manufacturing Co., as well as involvement in a $1 trillion AI manufacturing hub in Arizona. Earlier this year, the company considered acquiring US chip manufacturer Marvell Technology and is currently eyeing a $6.5 billion deal with Ampere Computing LLC.

Despite the promising growth potential of SoftBank’s revised strategy, several challenges loom regarding the funding of these ventures. Analysts express concerns about inflated valuations in the AI market and the prospective returns from extensive investments in data centers and chips.

Those who jumped on SoftBank’s early AI initiatives have already enjoyed significant gains, with shares more than doubling in recent months. As the company gears up for an expansive investment approach, market observers remain vigilant regarding how Son will balance these grand ambitions with effective financial stewardship.