SoftBank stock price snaps 3-day losing streak, jumps 3% despite weakness in Japanese stock market

SoftBank stock price jumped nearly 3% to 20,335 Japanese Yen on the Tokyo stock exchange in Monday's trading session, snapping a three-day losing streak last week.

The stock slid nearly 10% in the past five trading sessions following the company’s announcement that it had sold its entire stake in U.S. chipmaker Nvidia for $5.83 billion.

SoftBank’s stock closed at 19,780 yen, marking its third consecutive day of losses. The company also saw its biggest weekly decline since March 2020 last week, shedding approximately $50 billion in market value.

Despite recent developments, SoftBank and Nvidia will remain business partners. The Tokyo-based company is involved in multiple AI initiatives leveraging Nvidia’s technology, including the $500 billion Stargate project for U.S. data centres.

SoftBank’s Vision Fund was among the first major investors in Nvidia, reportedly acquiring a $4 billion stake in 2017 before fully exiting its position in January 2019. Despite the recent sale, SoftBank’s operations remain closely connected to Nvidia’s.

The stock decline also reflects investor worries that the swift surge in tech valuations may be excessive, despite SoftBank’s efforts to increase its investment in the AI sector.

Why did SoftBank sell its stake in Nvidia?

The $5.8 billion divestment of its Nvidia stake underscored the increasing capital needs it must meet to support its ambitious investment in ChatGPT developer OpenAI and other ventures.

“We want to provide a lot of investment opportunities for investors, while we can still maintain financial strength,” said SoftBank’s chief financial officer, Yoshimitsu Goto, during an investor presentation.

The conglomerate is set to allocate $22.5 billion for a follow-on investment in OpenAI, acquire chipmaker Ampere for $6.5 billion, and purchase the robotics division of Swiss company ABB for $5.4 billion, as per Reuters report.

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