Why SoftBank liquidated Nvidia to fund OpenAI?

A history of high-stakes tech wagers!

Softbank Group CEO Masayoshi Son recently selled the company’s entire USD 5.8 billion stake in Nvidia to finance a major investment in OpenAI. This major portfolio shift was announced alongside SoftBank’s latest quarterly results, signalling towards Son’s moving interest beyond hardware suppliers to focus capital directly on foundational artificial intelligence (AI) platforms and infrastructure.

The liquidation of the 32.1 million Nvidia shares in October, near the chipmaker’s all-time valuation highs, has generated market debate. While SoftBank's Chief Financial Officer Yoshimitsu Goto stated the sale was for capital reallocation, not a negative view on Nvidia, the timing has intensified concerns about overheating valuations in the AI sector.

Funding the next AI frontier

SoftBank needs substantial capital for its deepening commitment to AI. The sale of the Nvidia stake, alongside the recent liquidation of a USD 9.2 billion slice of T-Mobile stock and an expanded margin loan against Arm Holdings, directly feeds Son's immediate priorities.

Multiple news reports indicate. SoftBank is funding a multi-billion dollar follow-on investment in OpenAI. Son has publicly called his focus on OpenAI an ‘all-in’ bet on Artificial Super Intelligence (ASI).

Apart from that, SoftBank is committed to the multi-hundred-billion dollar "Stargate" project, an initiative to build massive AI data center capacity in the United States. The company has also made recent purchases, including the chip designer Ampere Computing for USD 6.5 billion.

Son’s pattern of extreme risk

This recent financial maneuver fits a recurring pattern in Masayoshi Son’s career, defined by high-stake bets.

In 2000, SoftBank invested USD20 million in the then-nascent Chinese e-commerce company Alibaba. This investment grew into an asset once valued at over USD 150 billion, funding the Vision Fund and cementing Son's reputation as a visionary.

Conversely, Son directed approximately USD 18 billion toward WeWork, the office-sharing startup. The company's subsequent failed IPO and organizational collapse forced SoftBank to execute a costly bailout and write down billions, a failure Son himself later called "a stain on my life."

SoftBank previously sold an earlier stake in Nvidia in 2019, missing out on the dramatic market rally that began shortly thereafter and was fueled by the early stages of the AI boom.

The current exit from Nvidia, although profitable, might carry the risk of repeating that missed opportunity should the chipmaker's valuation continue its exponential rise. However, for Son, the liquidation serves the crucial purpose of monetising a paper gain at a potential peak to fund a more speculative, yet potentially higher-reward, vertical integration strategy.