SoftBank Group’s shares suffered on Wednesday after the Japanese conglomerate confirmed that it had sold its entire stake in U.S. chip giant Nvidia for $5.83 billion. The proceeds will fund SoftBank’s $22.5 billion investment in OpenAI, the maker of ChatGPT, as mentioned on CNBC.Softbank had to free up capital to back large-scale infrastructure projects like the proposed “Stargate” data center initiative as well.

SoftBank’s Strategic Reallocation

In its latest earnings report, SoftBank disclosed that it had sold 32.1 million Nvidia shares in October, marking a major shift in its AI investment strategy. The company also cut its stake in T-Mobile, raising an extra $9.17 billion.

Chief Financial Officer Yoshimitsu Goto said during an investor presentation that the move was aimed at maintaining financial strength while exploring new investment opportunities, as quoted on CNBC. Despite the sale, analysts say SoftBank remains closely linked to Nvidia through its broader business interests, as mentioned on CNBC.

From Hardware to Software: A Strategic Shift

Most market watchers view SoftBank’s move away from Nvidia not as a retreat from AI, but as a shift toward the next level of the AI value chain, while staying within the realm of Nvidia’s business initiatives. SoftBank’s inclination toward OpenAI shows the Japanese conglomerate’s intent to be a key player across the AI arena, beyond hardware.

Rolf Bulk, equity research analyst at New Street Research, noted that while OpenAI is central to SoftBank’s generative AI portfolio, the company’s hardware ambitions continue through its collaboration with Arm on chip designs, as mentioned on a CNBC article.

Bottom Line

Since SoftBank’s Nvidia stake sale looks like more of a strategic rebalancing of its investments, one should not fear for Nvidia’s valuation. In fact, SoftBank’s greater association with OpenAI shows that the AI investing theme is in fine fettle despite all those bubble fears.

Still, the timing of the sale has stirred speculation that SoftBank may see limited upside left in Nvidia’s spectacular rise, as mentioned on Indian Express. Nvidia shares have tripled in value over the past two years. Nvidia shares also hit a $5-trillion market-cap mark lately (read: Best-Performing Leveraged ETFs of October).

However, SoftBank looks set to boost its position in artificial intelligence models. This makes AI themed ETFs intriguing bets at present. This is especially true given OpenAI’s several big-ticket deals signed with Big Tech companies (read: OpenAI's Dealmaking Spree Puts These ETFs in Focus).

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