Investment company cashes out of Nvidia, selling entire $5.83 billion stock holdings
SoftBank has sold off all its shares in US chipmaker Nvidia, offloading shares worth $5.83 billion as the Japanese giant redirects resources towards artificial intelligence leader and parent company of ChatGPT, OpenAI.
In October, SoftBank divested 32.1 million Nvidia shares, according to its latest earnings disclosure.
Simultaneously, the firm unloaded a portion of its T-Mobile holdings, generating an additional $9.17 billion in proceeds.
“We want to provide a lot of investment opportunities for investors, while we can still maintain financial strength,” said SoftBank’s chief financial officer, Yoshimitsu Goto, during an investor presentation.
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“So through those options and tools we make sure that we are ready for funding in a very safe manner,” he explained through the company's translation, describing the divestments as part of the firm's 'asset monetisation' approach.
The timing coincided with Nvidia shares experiencing a 2% pullback on Tuesday (11 November). SoftBank explained that the proceeds from these sales would fund several projects they're working on, including the acquisition of a robotics company from ABB.
Now, the combined sale of Nvidia shares, partial sale of T-Mobile shares and the margin loan on SoftBank’s holding in Arm are all 'sources of cash that will be used to fund the $22.5 billion investment in OpenAI,' a person familiar with the matter stated.
Although, none of the offloading had anything to do with growing concerns of the AI market, the person assured.
Interestingly, this isn't the first time SoftBank has bought and sold Nvidia shares. Back in 2017, they bought about $4 billion worth of Nvidia stock, then sold it all in early 2019.
Even though SoftBank no longer owns Nvidia stock, it's still heavily involved in projects that use Nvidia's technology. For example, they're part of a massive $500 billion project called Stargate that's building advanced data centres across the US, which rely on Nvidia chips.
“This should not be seen, in our view, as a cautious or negative stance on Nvidia, but rather in the context of SoftBank needing at least $30.5bn of capital for investments in the Oct-Dec quarter, including $22.5bn for OpenAI and $6.5bn for Ampere,” Rolf Bulk, equity research analyst at New Street Research, explained.
Another analyst, Dan Baker from Morningstar, agreed that this isn't a big strategic change for SoftBank.
″[SoftBank] made a point of saying that it wasn’t any view on NVIDIA. [...] At the end of the day, they are using the money to invest in other AI-related companies,” he said.
All the buying and selling, combined with their other AI investments, has increased SoftBank's value to $19 billion, double its profits this past quarter.
SoftBank's Vision Fund has been aggressively pouring money into AI companies across the board, from companies making AI chips and AI software to companies making AI-powered robots.
“The reason we were able to have this result is because of September last year, that was the first time we invested in OpenAI,” said SoftBank’s Goto.