SoftBank Sells Nvidia Stake to Fund AI
SoftBank sold its entire stake in Nvidia for approximately ₹48,000 crore ($5.8 billion).
Shares fell by nearly 10% following the sale.
The sale signals SoftBank’s need for significant funding to invest heavily in AI, particularly in OpenAI.
Major AI Investment Plans
SoftBank plans several major AI deals in the coming months:
$22.5 billion (₹1.87 lakh crore) investment in OpenAI.
$6.5 billion acquisition of chipmaker Ampere.
$5.4 billion purchase of swiss company ABB’s robotics division.
Analyst Mary Pollock estimates SoftBank has committed $41 billion (₹3.4 lakh crore) in recent AI investments and acquisitions.
Cash Reserves and Funding Needs
SoftBank had approximately 4.2 trillion yen (₹2.3 lakh crore) in cash as of september 2024.
Despite strong liquidity, the company requires more cash this quarter to complete its AI deals.
SoftBank is also raising funds through loans and bonds:
$8.5 billion loan for OpenAI.
$6.5 billion bridge loan for Ampere acquisition.
Currency bonds totaling $8.28 billion issued in yen, dollars, and euros.
Loan-to-value ratio is 16.5%, considered safe by CFO Yoshimitsu Goto.
Share Performance and Market Reaction
SoftBank shares fell by nearly 10%, then recovered slightly to down 3.46%.
Nvidia shares and SoftBank subsidiaries also fell about 3%.
Investor concerns include high AI and tech valuations, increasing perceived investment risk.
CEO Masayoshi Son’s AI Strategy
CEO Masayoshi Son is known for aggressive, risk-taking investments.
Son sees AI as the next major tech revolution and believes large AI companies will continue growing.
SoftBank aims to reinvest Nvidia proceeds into AI ventures, including OpenAI.
Vision Fund CFO Navneet Govil highlights that today’s AI spending is revenue-driven, unlike the dot-com bubble.
Disclaimer:
The information contained in this article is for general informational purposes only. While we strive to ensure accuracy, we make no warranties or representations of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability of the content. Any reliance you place on the information is strictly at your own risk. The views, opinions, or claims expressed in this article are those of the author and do not necessarily reflect the official policy or position of any organization mentioned. We disclaim any liability for any loss or damage arising directly or indirectly from the use of this article.
click and follow Indiaherald WhatsApp channel