SoftBank Group’s (9984.T) shares fell as much as 10% on Wednesday after the company sold its $5.8 billion stake in Nvidia (NASDAQ:NVDA), highlighting growing concerns over its aggressive funding strategy. The sale underscores SoftBank’s mounting cash needs as it pursues massive investments in artificial intelligence, including a planned $22.5 billion follow-on investment in ChatGPT creator OpenAI and other technology ventures.
The Japanese conglomerate is also acquiring chipmaker Ampere in a $6.5 billion deal and has agreed to buy the robotics division of Swiss company ABB for $5.4 billion. Altogether, analysts estimate that SoftBank has committed to more than $41 billion in spending over recent months, pressuring its liquidity position.
Funding pressure and cash requirements
According to CreditSights analyst Mary Pollock, SoftBank’s total cash commitments have reached a critical level. “SoftBank’s cash needs in the current quarter are substantial,” Pollock wrote in a note, adding that while the company’s liquidity improved after issuing hybrid securities in October, it must still be proactive in funding its new investments. The firm reported 4.2 trillion yen ($27.9 billion) in cash at the end of September.
To sustain its ambitious expansion, SoftBank has relied on a combination of asset sales, bond issuances, and loans. Between June and September, the group sold its holdings in Nvidia and T-Mobile US (NASDAQ:TMUS), generating $9.2 billion from the latter transaction. It also took out an $8.5 billion loan to finance its OpenAI investment and arranged a $6.5 billion bridge loan for the Ampere acquisition, which has yet to be drawn.
Since April, the company has issued multi-currency bonds worth 620 billion yen ($4.1 billion), $2.2 billion, and €1.7 billion ($1.98 billion). Its loan-to-value ratio stood at 16.5% as of September, down from 17% the previous quarter. SoftBank CFO Yoshimitsu Goto described that level as “a bit too safe,” suggesting the group still has room to increase leverage to support its expansion strategy.
Market reaction and investor sentiment
SoftBank’s share price volatility reflects investor unease about the company’s growing exposure to AI assets amid soaring tech valuations. The stock, which had quadrupled between April and October, has retraced some of its gains in recent days. After plunging up to 10% in early trading on Wednesday, the shares closed down 3.46%. Nvidia and Arm Holdings, the chip designer controlled by SoftBank, both fell about 3% overnight.
Despite market jitters, analysts say SoftBank’s move to sell Nvidia shares is more about strategic reallocation than pessimism. “I do not think SoftBank has a negative view on Nvidia,” said Rolf Bulk, an analyst at New Street Research. “The position was large, liquid, and easy to monetize, and likely SoftBank sees even more upside in reallocating capital to OpenAI.”
Masayoshi Son, SoftBank’s founder and CEO, remains bullish on artificial intelligence and has repeatedly compared the technology’s evolution to transformative corporate eras led by companies such as Alphabet’s Google (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN). He has described AI as the “core driver” of future value creation for SoftBank’s portfolio.
AI optimism outweighs valuation fears
Even as analysts warn about potential overvaluation in the AI sector, SoftBank executives insist the fundamentals remain strong. “What’s different between the dotcom boom and today is that AI companies are generating meaningful revenues,” said Navneet Govil, CFO of the Vision Fund, in an interview with Reuters. “There’s a lot of talk about capex spend, but it’s actually driven by demand,” he added.
SoftBank’s commitment to AI-driven investments reflects its “all-in” strategy to position itself at the forefront of technological innovation. While short-term funding pressures remain, the company is betting that its diversified exposure to leading-edge firms like OpenAI, Ampere, and Arm will yield long-term gains — even if investors remain cautious for now.
