Nvidia’s latest round of share sales, which included SoftBank’s $5.8 billion departure and other institutional cuts, led to inevitable rumors: Is the AI trade losing its appeal?
Upon closer examination, the scenario changes. SoftBank isn’t backing away from AI; instead, it’s putting more money into OpenAI, robots, and data centers that use Nvidia’s own processors.
And the Street isn’t exactly hiding from it, either. Bank of America analysts said in a recent research note that the current wave of “AI skepticism” is “healthy but overstated.” They also said that it is “likely a contrarian positive, helping to minimize overcrowding.”
In other words, what appears like selling can be a rotation, not a retreat, inside the same AI boom.
SoftBank sold Nvidia to fund AI, not flee it
The news of SoftBank selling its whole Nvidia investment for $5.83 billion made headlines, but the deal indicates more about liquidity than a lack of trust.
The Japanese conglomerate sold 32.1 million Nvidia shares in October, with part of its T-Mobile holdings, as part of what it characterized as a plan for “asset monetization.”
“We want to provide a lot of investment opportunities for investors, while we can still maintain financial strength,” said SoftBank Chief Financial Officer Yoshimitsu Goto during an investor presentation.
“So through those options and tools we make sure that we are ready for funding in a very safe manner,” he added, in comments translated by the company.
The money from Nvidia and T-Mobile sales, as well as a margin loan on SoftBank’s Arm holdings, will help fund $22.5 billion in new investments in OpenAI and other initiatives, such as acquiring ABB’s robotics business.
The sale of the share also contributed to SoftBank’s great quarter, as its Vision Fund made $19 billion and helped the business treble its profits. SoftBank still has a lot to do with the AI ecosystem, from big language models to robots, even if it sold its Nvidia shares. A lot of this still operates on Nvidia technology.
SoftBank may rejig its portfolio, but it still believes in the same future that Nvidia is working toward.
Big investors are trimming Nvidia: Here’s why they’re still bullish on AI
SoftBank wasn’t the only one to cut down on Nvidia stock this year, but the reasons on Wall Street appear more like a cleanup than a rule-breaking move.
Several big investors, including State Street, Bridgewater Associates, and T. Rowe Price, have sold part of their NVDA stakes in the last few quarters. This is mostly because they want to keep their portfolios from being too concentrated following Nvidia’s spectacular run.