SoftBank Group’s chief, Masayoshi Son, has broken his silence regarding the company’s decision to sell its entire stake in Nvidia, the leading chipmaker. At a business conference in Tokyo, Son stated that while he was reluctant to sell any Nvidia shares, the company required cash to invest in significant future plans.
Son revealed his feelings about the sale, saying, "I was crying to sell Nvidia shares." The primary reason for this decision was SoftBank's need for capital to invest in OpenAI and various other artificial intelligence ventures, which include the construction of large-scale data centers.
Addressing critics who believe excessive funds are being allocated to AI, Son defended the substantial spending. He argued that if AI eventually accounts for just 10% of the global economic output, the current investments, even if in the trillions, would yield substantial returns. Son questioned the notion of an AI bubble, asking, "Where is the bubble?"
The FII Priority Asia forum in Tokyo was attended by prominent figures, including Prime Minister Sanae Takaichi and senior government finance officials, underscoring the strengthening collaboration between Japan and Saudi Arabia.
Son’s initial Vision Fund received $45 billion from Saudi Arabia’s Public Investment Fund (PIF). The PIF has invested approximately $11.5 billion in Japan between 2017 and 2024, with projections indicating this figure will reach around $27 billion by 2030, according to PIF Governor Yasir Al-Rumayyan.
Nvidia Exit Generates Significant Profits
Previous reports indicated that SoftBank sold 32.1 million Nvidia shares in October, generating $5.8 billion. This sale coincided with the company’s release of second-quarter earnings, which showed profits more than doubling to 2.5 trillion yen, equivalent to approximately $16.6 billion.
This performance represented SoftBank's most profitable three-month period since the summer of 2022. The surge in profits was largely attributed to unrealized gains from its investment in OpenAI, valued at 2.16 trillion yen for the quarter.
This is not SoftBank's first divestment from Nvidia. The firm previously sold a $3.6 billion stake in 2019, only to reacquire shares in 2020 before the most recent sale. If those original shares had been retained, they would now be valued at over $150 billion.
During an earnings call, SoftBank's finance chief, Yoshimitsu Goto, explained the necessity of the sale. "This year our investment in OpenAI is large, more than $30 billion needs to be made," Goto stated. "For that, we do need to divest our existing assets."
Goto emphasized that the timing of the October sale was not a reflection of Nvidia’s future prospects. He characterized it as standard practice for SoftBank, which regularly reallocates capital by selling some assets to fund new investments. He clarified that the decision had "nothing to do with Nvidia itself."
Strategic Asset Sales Fuel AI Ambitions
SoftBank's commitment to OpenAI has significantly intensified in recent times. In March, the company agreed to lead a funding round that could reach up to $40 billion, valuing OpenAI at $300 billion. This agreement included an initial payment of $10 billion in April, with an additional $30 billion scheduled for December. SoftBank intends to involve other investors for $10 billion, bringing its direct contribution to $30 billion.
In October, SoftBank's board approved another installment of $22.5 billion, contingent on OpenAI restructuring its business to facilitate a future initial public offering. Should this restructuring not be completed by the end of the year, SoftBank's total investment would be reduced to $20 billion. By the end of December, SoftBank anticipates having invested $34.7 billion in OpenAI.
OpenAI's valuation has seen a dramatic increase, rising from $157 billion last October to $300 billion in March, and subsequently to $500 billion after employees sold shares in the previous month. This valuation makes it the most valuable private company globally, surpassing even Elon Musk's SpaceX.
To finance the OpenAI investment, SoftBank has been divesting other assets, including $9.17 billion worth of T-Mobile stock between June and September. The company has also issued bonds, secured bridge loans, and increased a margin loan backed by Arm Holdings shares from $13.5 billion to $20 billion.
Progress on the "Stargate" initiative has reportedly been slower than anticipated. In September, Goto acknowledged that aligning all partners, including Oracle and Abu Dhabi's MGX, presents ongoing challenges.