Key Takeaways
- SoftBank on Tuesday said it raised nearly $6 billion selling its stake of Nvidia shares.
- But it’s using those and other funds to invest in OpenAI, so the Japanese company isn’t getting out of the AI business.
SoftBank is out of Nvidia stock—but not the AI trade.
The Japanese company in a Tuesday statement said it sold 32.1 million shares of chip giant Nvidia (NVDA), a “complete sale,” in October, raising $5.83 billion. That comes to an average price of just under $182, below Monday’s $199.05 per share close. (It also reported $9.17 billion in proceeds on sales of T-Mobile (TMUS) between June and September.)
Nvidia’s shares hit their latest record high of $212 in late October, but investors more recently have shown signs of wariness about valuations and the health of the AI trade. That’s shown up in today’s action, too; Nvidia’s stock was down more than 3% in midday trading, more than broader markets.
But SoftBank isn’t pulling back from AI investments. It put billions of dollars into OpenAI earlier this year, making the ChatGPT owner the world’s most-valuable startup, and that appears to be behind some of the company’s latest investment moves; The company last month committed more than $22 billion in additional funding to OpenAI.
Why This Matters to Investors
Traders trying to time an AI bubble don’t have it easy, and today’s Nvidia news illustrates why. It might be tempting to read SoftBank’s sale of Nvidia shares as a bearish signal—but the move is meant to raise money to fund investments in OpenAI.
“We are making large investments in OpenAI,” The Wall Street Journal quoted SoftBank CFO Yoshimitsu Goto as saying today. “To do that, we have to use some of our existing assets to raise funds.”
Investors trying to connect the dots these days don’t have an easy job. Concerns about AI-stock valuations have weighed on shares lately, with some analysts suggesting shorting the hyperscalers whose spending has driven business and share prices this year. The word “bubble” has been in pretty heavy use in recent weeks.
But elsewhere in the trade, investors continue to look for opportunities to push some shares in the food chain higher. Yesterday, for example, it was memory and data-storage stocks. And interest in the big names has hardly dried up; Nvidia, for example, was held by more than three-quarters of active fund managers in October, according to a Bank of America analysis.
