SoftBank Sells Entire Nvidia Stake for £5 Billion Pounds Amid AI Bubble Concerns

SoftBank has sold its entire holding in Nvidia for approximately £5.8 billion, drawing renewed scrutiny over the sustainability of the artificial intelligence investment cycle. The Japanese conglomerate confirmed it will redirect the proceeds from the sale towards further investments in AI projects.

SoftBank reported a net profit of £16 billion in its second quarter, marking a 190 percent increase compared to the previous year. Investment gains also climbed by 48 percent. This latest move contributed to a two percent rise in SoftBank’s share price, valuing the company at £209 billion. The decision to exit Nvidia reflects worries among some industry leaders that listed companies with sizeable exposure to AI may be approaching their peak valuations, a trend that has intensified in recent months.

Nvidia’s valuation surpassed the £5 trillion mark several weeks ago, underscoring both the excitement and anxiety surrounding AI-related equities. The sharp rise in such valuations has prompted warnings from central banks and leading figures on Wall Street about a potential AI bubble. Despite these concerns, SoftBank’s chief financial officer, Yoshimitsu Goto, stated that the October sale was not prompted by the performance of Nvidia itself. He declined to comment on whether the current climate qualifies as a bubble.

SoftBank’s chief executive, Masayoshi Son, has expressed regret in the past about previous sales of Nvidia shares, describing the 2019 divestment as a missed opportunity given Nvidia’s subsequent surge in value. Nevertheless, the group continues to pursue significant investments in AI infrastructure and companies, including OpenAI, Oracle, and the Stargate project in the United States. According to its results, the company is working toward securing a £500 billion commitment for future investments in digital and AI infrastructure.

The historical value of SoftBank’s holdings reached £261 billion, buoyed by its stakes in Arm, the Cambridge-based chip designer, and OpenAI. This year, SoftBank plans to commit £30 billion to the creator of ChatGPT and currently owns 11 percent of the company. Its portfolio also features investments in ByteDance, the owner of TikTok, as well as Intel and Deutsche Telekom.

Only three years ago, SoftBank recorded the largest loss in its history. The group, established over four decades ago with a focus on software distribution, owes much of its early success to prescient investments in Yahoo and, legendary for its £20 million investment, Alibaba. Its aggressive pursuit of opportunities in the advanced technology sector continues to shape its fortunes, even as debate intensifies about the risks of overvaluation in AI.