SoftBank Group Corp. (TYO:9984) shares fell on Wednesday after the Japanese technology conglomerate disclosed it had sold its entire stake in artificial intelligence major NVIDIA Corporation (NASDAQ:NVDA).
The sale largely overshadowed stronger-than-expected second quarter earnings from Softbank, as the company reaped strong returns on its aggressive investments in AI and tech over the past three years. Chief among these was its $40 billion bet on OpenAI and a $500 billion project to build AI data center infrastructure in the United States.
Softbank’s shares fell as much as 10% to 20,415.0 yen in Tokyo trade. They were the biggest weight on the Nikkei 225, which rose marginally.
Softbank shares traded down 5.4% to 21,450 yen by 19:49 ET (00:49 GMT). Nvidia shares fell 2.9% overnight.
Softbank on Tuesday disclosed it had sold its entire stake in Nvidia- 32.1 million shares for $5.8 billion– in October. The conglomerate signaled that the sale was to free up more cash it could then invest in other AI ventures.
But the timing of the sale sparked concerns over steep AI-driven valuations, especially given that Nvidia suffered deep losses through October and early-November on said concerns.
The sale also came with tech stocks nursing some of their worst selloffs in years, as investors fretted over a potential AI bubble in the sector.
This was fueled by recent warnings from top U.S. banks that current equity valuations appeared unsustainable. Investor Michael Burry, famous for predicting and trading off the 2008 housing crash, was also seen opening short positions on Nvidia and other AI major Palantir Technologies Inc (NASDAQ:PLTR) last week. He had also warned of a bubble earlier this month.
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. Burry more recently warned that major technology firms were understating the depreciation in their computing assets.
