SoftBank Group (9984.T) shares plunged as much as 10% on Wednesday, after the company’s $5.8 billion sale of its Nvidia stake raised questions about how it will finance its massive new AI investment spree, including major commitments to OpenAI.
The Japanese conglomerate is preparing to fund a $22.5 billion follow-on investment in OpenAI, alongside a $6.5 billion acquisition of chipmaker Ampere and a $5.4 billion purchase of ABB’s robotics division. Analysts estimate these moves bring SoftBank’s recent spending commitments to over $41 billion.
Despite holding 4.2 trillion yen ($27.9 billion) in cash at the end of September, CreditSights analyst Mary Pollock said the group’s short-term funding needs remain “substantial.” She added that SoftBank will likely need to “be proactive” in sourcing additional liquidity to sustain its AI push.
The selloff also reflects investor concerns that tech valuations are overstretched, even as SoftBank doubles down on its “all-in” strategy for artificial intelligence. Founder and CEO Masayoshi Son, long known for his high-risk investing style, remains confident that AI will define the next era of growth.
“The Nvidia position was large, liquid, and easy to monetize,” said Rolf Bulk, analyst at New Street Research, noting that SoftBank likely sees more upside by reallocating funds toward OpenAI.
SoftBank’s shares, which had quadrupled between April and October, closed the day down 3.46% after paring earlier losses. Nvidia and Arm Holdings, the chip designer SoftBank controls, also slipped around 3% overnight.
To fuel its aggressive investment agenda, SoftBank has raised funds through bond issuances and multi-billion-dollar loans, including an $8.5 billion facility for OpenAI and a $6.5 billion bridging loan for Ampere. CFO Yoshimitsu Goto said the group’s debt ratio of 16.5% is “actually a bit too safe,” signaling room for more leverage.
SoftBank’s Vision Fund CFO Navneet Govil defended the spending, arguing that today’s AI sector is fundamentally different from past speculative bubbles: “AI companies are generating meaningful revenues. The capital expenditure boom is driven by real demand.”