Shares of Japan's SoftBank Group plunged as much as 10% in early trading on Wednesday, the day before the company disclosed that it had sold all its shares in U.S. chip giant NVIDIA for $5.83 billion. According to a person familiar with the matter, the funds will be used for SoftBank’s $22.5 billion investment in ChatGPT parent company OpenAI.
SoftBank said in its fiscal second-quarter results report that it sold 32.1 million Nvidia shares in October. In addition, it also reduced its position in T-Mobile and raised US$9.17 billion.
"We want to provide investors with substantial investment opportunities while still maintaining our financial strength," SoftBank Chief Financial Officer Yoshimitsu Goto said at an investor presentation.
While the decision to sell Nvidia shares may have caught some investors off guard, it's not SoftBank's first exit from the U.S. chip giant.
The company's Vision Fund was an early backer of Nvidia, reportedly taking a $4 billion position in 2017 before pulling out entirely in January 2019. Despite the recent sale, SoftBank maintains close ties to Nvidia through its broader business interests.
"In our view, this is a bullish sign that SoftBank is doubling down, not a bearish sign," said Dan Ives, global head of technology research at Wedbush Securities.
New Street Research equity research analyst Rolf Bulk said that while OpenAI is the core of SoftBank's GenAI portfolio, hardware remains a priority, mainly through its stake in British chip design company Arm, with which SoftBank is co-developing products. SoftBank has a controlling stake in UK-based Arm, which designs chips for mobile and artificial intelligence processors.
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SoftBank sells out all Nvidia shares for US$5.83 billion