Tokyo-based SoftBank Group announced that it has sold its entire stake in Nvidia Corporation for approximately $5.8 billion. The company stated in its quarterly earnings that the shares were sold in October. The company said that it wants to concentrate its resources on large-scale artificial intelligence investments instead.
Why exit now, amid the AI boom?
SoftBank exiting Nvidia at a time when Nvidia is arguably the poster-child of the AI surge seems counter-intutive. However, some may argue that SoftBank is re-allocating its capital to potential next-generation AI ventures. This would mean its making room for large commitments, like the one with to OpenAI and its other ambition to build out AI infrastructure, like its investment into Intel recently.
SoftBank apparently hinted it did not sell because of problems at Nvidia, but because it needed to free up funds. The bank is optimizing its portfolio after a strong profit quarter and choosing to realise gains while backing its new strategic priorities.
SoftBank announced a sharp rise in earnings for the April to September period, posting approximately 2.5 trillion yen ($13 billion) in profit. Revenue for the six-month span climbed 7.7% compared to the previous year, reaching 3.7 trillion yen ($24 billion).
Markets react to the announcement
For Nvidia, the sale triggered a modest dip in shares, which fell about 1.1 – 1.3 % in pre-market trading after the disclosure on Tuesday. But the stock bounced back during trading hours gaining over 5%. Given Nvidia’s market-cap in the trillions, $5.8 billion is small in absolute terms. However, an exit by a major backer raises questions about future sentiment.
The move reinforces that large tech investors are reallocating away from pure chip-plays toward the broader AI stack and infrastructure. For now, Markets will watch how Nvidia executes its growth into new AI markets, and how SoftBank deploys the freed-up $5.8 billion.