SoftBank, the Japanese technology giant, has staked its future on artificial intelligence. However, to help offset the costs of those expensive investments, the company sold its entire $5.8 billion stake in Nvidia, the chipmaker behind the AI boom, SoftBank announced in its quarterly earnings report on Tuesday.
SoftBank’s enormous spending plans, including some $30 billion alone on OpenAI, come amid a flood of planned investments in artificial intelligence across the technology industry — including circular deals among the same companies.
(Nvidia, for example, is committed to investing up to $100 billion in OpenAI, which in turn plans to buy an enormous slug of the chipmaker’s processors.)
News that SoftBank, a prominent technology investor, was exiting one of the biggest names in artificial intelligence sparked concern among some investors that the rally in AI stocks was overdone.
A new skeptic of the boom appeared on Monday: Michael Burry, the hedge fund manager made famous by the book and the movie “The Big Short,” questioned on social media the accounting for tech giants’ huge purchases of computer chips.
But SoftBank’s reason for the sale was purely pragmatic, according to its chief financial officer, Yoshimitsu Goto. “We do need to divest our existing portfolio so that it can be utilized for our financing,” he told analysts. “It’s nothing to do with Nvidia itself.”
Late last month, OpenAI completed a corporate reorganization to become a for-profit company. As part of that move, SoftBank agreed to make its full $30 billion investment in the ChatGPT maker.
The move underscored the steep financial requirements of SoftBank’s continuing focus on artificial intelligence. “I want SoftBank to lead the AI revolution,” Masayoshi Son, the company’s founder and chief executive, said in 2023.
That has meant making significant pledges, including the OpenAI investment, and joining a venture called Stargate, which is a collaboration between OpenAI, Oracle, and Others that intends to build an array of data centers.
More broadly, SoftBank has announced that it plans to invest $100 billion in projects in the United States.
Doing so has forced the company to find the money for its pledges, including by selling off existing investments and borrowing heavily.
In some cases, however, those investments have already paid off. Despite the price tag of the OpenAI commitment, the start-up’s soaring valuation — on paper, at least — helped SoftBank more than double its profit in the most recent quarter, to 2.5 trillion yen, or $16.2 billion.
But SoftBank’s sale of its Nvidia stake resurrected memories of its last investment in the chipmaker, which it sold off in 2019. That was a few years before its stock began to climb on the back of demand for A.I. services like ChatGPT.
