SoftBank Hunts for Pennies to Meet Its OpenAI Commitment

Would you trade shares in Nvidia for stock in OpenAI? That’s what SoftBank just did, selling $5.8 billion worth of shares in the AI chip giant to finance a commitment to invest $22.5 billion in the ChatGPT maker. On the surface, it might seem a logical trade, given that chip companies purporting to compete with Nvidia have proliferated like cockroaches in a darkened New York City apartment. But it’s doubtful SoftBank sold because CEO Masayoshi Son thinks Nvidia’s price has maxed out. After all, Nvidia has a deep moat, partly thanks to the software its chips run on. (More on that, see here).

Instead, the sale is a sign of Son’s desperation to finance his commitment to OpenAI CEO Sam Altman. He is scouring the proverbial cushions on SoftBank’s couch for spare change. For SoftBank, the Nvidia stake was, indeed, the equivalent of pennies. It was not a major stake SoftBank had held for a long time, such as its position in T-Mobile or Alibaba. The company’s securities disclosures imply it started buying the stake in the first half of last year, noted MST Financial analyst David Gibson, when the stock was at half where it is now. (The stake shouldn’t be confused with a position SoftBank bought and sold in Nvidia several years ago.) Also, SoftBank’s interest in Nvidia was absolutely tiny—32.1 million shares, equivalent to 0.13% of Nvidia.