In order to build his own sphere of influence supporting artificial intelligence, SoftBank Group Corp. sold its entire stake in Nvidia Corp., pocketing $5.8 billion ahead of a rash of planned investments by founder Masayoshi Son.
How Did This Happen?
This has affected the share holding pattern as now the Tokyo-based company had raised its stake in Nvidia to about $3 billion by the end of March.
It appears that this stake and a windfall at the Vision Fund startup investment unit helped SoftBank report a surprise net income of ¥2.5 trillion ($16.2 billion) in its fiscal second quarter.
This is quite a hike as it is far outrunning the average of analyst estimates of ¥418.2 billion.
In the meantime, SoftBank announced a 4-for-1 stock split that will take place January 1 on Tuesday.
After this disinvestment, Son’s company now boasts a portfolio that includes some of the world’s most sought-after names in AI including OpenAI and Oracle Corp.
It seems that those stakes boosted SoftBank’s paper gains and helped drive a 78% surge in its share price over the three months ending in September.
Please note here that this is so far its best such performance since the December quarter of 2005.
Looking To Capitalize On Booming Investment in AI and Chips
In this regard, the Citigroup analyst Keiichi Yoneshima wrote that “they have raised their forecasts as the number of bets from which SoftBank is successfully recouping its investment has increased,” in a note ahead of the earnings release.
Moving ahead, the analyst set his target price for SoftBank’s stock at ¥27,100, linking his calculations with OpenAI’s valuation and assuming a future valuation range of $500 billion to $1 trillion for the ChatGPT operator.
With this move, Son is aggressively looking to capitalize on booming investment in AI and chips, even as he scales back other investments.
It appears that the SoftBank founder’s ambition has fueled initiatives considering the Stargate data center rollout and a planned $30 billion investment in OpenAI.
Besides this, they are also courting Taiwan Semiconductor Manufacturing Co. and others about taking part in a $1 trillion AI manufacturing hub in Arizona.
