SoftBank Group shares crashed up to 10 percent on Wednesday after the Japanese conglomerate announced it was selling its entire stake in U.S. chip giant Nvidia at $5.83 billion.
A person familiar with the matter told CNBC that the capital will be used to fund SoftBank’s $22.5 billion investment in ChatGPT parent OpenAI.
However, the SoftBank Group shares traded at more than 6 percent lower. SoftBank, in its earnings report, stated that it sold 32.1 million shares of Nvidia in October. Therefore, it also streamlined its T-Mobile investments, generating $9.17 billion.
During an investor presentation, the Chief Financial Officer of SoftBank, Yoshimitsu Goto, said, “We want to provide a lot of investment opportunities for investors, while we can still maintain financial strength.”
Although the move to sell Nvidia shares might have been unexpected by some investors, it is not the first time that SoftBank has left the U.S. chip giant.
One of the earliest supporters of Nvidia was its Vision Fund, which was said to be building a $4 billion stake in 2017 before fully divesting in January 2019.
Even after the most recent sale, SoftBank still has a strong connection with Nvidia due to its wider business consideration.
Global Head of Technology Research of Wedbush, Daniel Ives, added that “This is a bullish signal on the theme from SoftBank doubling down and not a bearish sign in our view.”
According to Senior Equity Research Analyst of New Street Research, Rolf Bulk, reported that although OpenAI is the center of the GenAI portfolio of SoftBank, hardware is also a priority, primarily via its ownership of British chip designer Arm, with which it is co-developing products.
U.K.-based Arm Holdings is controlled by SoftBank and features mobile and AI processors.
Meanwhile, several other technology stocks in the area went down as well. Semiconductor testing equipment maker Advantest and Tokyo Electron, a chip production equipment maker, dropped over 2 percent.
TSMC, the largest contract chipmaker in the world based in Taiwan, slipped 0.34 percent. SK Hynix, which is a South Korean memory chip giant, was down by 1.62 percent.
