Clear Nvidia to Add OpenAI? Investors Not Buying It, SoftBank Plunges 10%

Wednesday, Japan's tech investment giant SoftBank shares once plunged 10%, after the day before the company announced clearing "AI chip overlord" Nvidia, making investors already nervous about tech sector high valuations even more panicked.

 

Wednesday, SoftBank shares opened with big dive, once down 10%, though pullback narrowed later, but as of now, still down over 6%.

 

SoftBank Tuesday disclosed sold all Nvidia stake in October for $5.83 billion. Facing market doubts, company responded this sale unrelated to Nvidia itself, but necessary financing measure.

 

SoftBank CFO said, "Due to large-scale OpenAI investment, so raised funds through (selling stocks) and put to use." But he dodged whether AI investment "bubbly."

 

 

SoftBank that day did disclose in earnings, will invest additional $22.5 billion in ChatGPT developer OpenAI via Vision Fund 2 in December.

 

However, this failed to dispel market doubts. Investors clearly not buying its "clear Nvidia, add OpenAI." Though AI investments brought rich returns, SoftBank Tuesday posted better-than-expected quarterly results, but shares still couldn't escape falling.

 

Nvidia stock investment, plus SoftBank's tech investment fund Vision Fund profits, helped SoftBank achieve ¥2.5 trillion (~$16.2 billion) net profit in Q2 FY 2025, far above analyst average expected ¥418.2 billion.

 

Earnings also showed OpenAI investment contributed ¥2.157 trillion (~$14 billion) book gains that quarter.

 

As SoftBank exits Nvidia stake, market debate over Meta, Alphabet Inc. etc large tech giants' AI spending (expected over $1 trillion next few years) generating returns intensifies.

 

At same time, market starting reflect injecting massive capital into tech with uncertain returns, and whether gains for companies seen as AI R&D leaders reasonable.

 

Tuesday, Nvidia shares once down 3.9%, close narrowed to 2.96% drop, up about 40% YTD.

 

SoftBank founder Masayoshi Son past months trimming assets to raise funds for numerous AI projects, including "Stargate" data center with OpenAI, Oracle.

 

SoftBank eager to dominate growing ecosystem, plans use stakes in key industry firms (from OpenAI to U.S. chip design firm Ampere Computing LLC) to achieve goal.

 

Citi analyst Keiichi Yoneshima in report: "Company (SoftBank) value changes with market assessment of investment value, so believe stock may fluctuate sharply future. But with net asset value (NAV) on expansion track, believe investors will eventually bullish on stock."