Nvidia shares took a bit of a nose dive on Tuesday morning after SoftBank made a bold investment decision that sent shockwaves through the stock market. The Japanese conglomerate announced it had sold its entire stake in the renowned chipmaker to fund a significant investment in OpenAI, a move that has some investors raising their eyebrows. Right out of the gate, Nvidia’s stock dropped more than 2%, despite the fact that it had just soared 5.7% in the previous trading session. It looks like SoftBank’s actions are having a ripple effect.
In its recent earnings report, SoftBank disclosed that it sold a whopping 32.1 million shares of Nvidia in October for $5.83 billion. That’s no small change! The Chief Financial Officer of SoftBank, Yoshi Mitsu Goto, explained that this divestiture was necessary to make room for their considerable investment plans with OpenAI, estimating an additional investment of more than $30 billion. In other words, SoftBank needs to free up some cash, and selling off its Nvidia shares seemed like the logical step.
SoftBank’s history with Nvidia dates back to 2017, when the company forked over about $4 billion for its initial stake. Fast forward to 2019, and the firm decided to cash out, walking away with a handsome $3.3 billion profit. However, it seems that SoftBank’s founder and CEO, Masayoshi Son, has had a case of seller’s remorse. He lamented about the colossal missed opportunity after selling, noting that if he had held on just a little longer, he could have reaped a windfall of more than $150 billion from Nvidia’s phenomenal growth. It’s safe to say that Son might feel like he let a big fish get away.
Son, who boasts an impressive net worth of around $72.2 billion, ranking 26th on the list of the world’s richest people, has been busy pursuing other tech ventures as well. He has overseen massive investments in AI, including a staggering $500 billion Stargate project alongside OpenAI, Oracle, and MGX to bolster AI infrastructure in the U.S. It seems that while SoftBank is stepping back from Nvidia, it certainly isn’t stepping away from big tech bets.
Despite their recent exit, SoftBank’s connection to Nvidia didn’t end there. Earlier in the year, the firm reported ownership of over 30 million shares again, suggesting a renewed interest in the chipmaker as it continues to dominate the market, fueled by growing demand for AI. Nvidia’s astronomical rise in value has catapulted it into the history books, becoming the first-ever company valued at both $4 trillion and $5 trillion. Whether or not SoftBank’s latest decision will pay off in the long run remains to be seen, but one thing’s for sure: the stock market is never short on twists and turns. Stay tuned, as this tech saga continues to unfold!
