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Would you trade shares in Nvidia for stock in OpenAI? That’s what SoftBank just did, selling $5.8 billion worth of shares in the AI chip giant to finance a commitment to invest $22.5 billion in the ChatGPT maker. On the surface, it might seem a logical trade, given that chip companies purporting to compete with Nvidia have proliferated like cockroaches in a darkened New York City apartment. But it’s doubtful SoftBank sold because CEO Masayoshi Son thinks Nvidia’s price has maxed out. After all, Nvidia has a deep moat, partly thanks to the software its chips run on. (More on that, see here).
Instead, the sale is a sign of Son’s desperation to finance his commitment to OpenAI CEO Sam Altman. He is scouring the proverbial cushions on SoftBank’s couch for spare change. For SoftBank, the Nvidia stake was, indeed, the equivalent of pennies. It was not a major stake SoftBank had held for a long time, such as its position in T-Mobile or Alibaba. The company’s securities disclosures imply it started buying the stake in the first half of last year, noted MST Financial analyst David Gibson, when the stock was at half where it is now. (The stake shouldn’t be confused with a position SoftBank bought and sold in Nvidia several years ago.) Also, SoftBank’s interest in Nvidia was absolutely tiny—32.1 million shares, equivalent to 0.13% of Nvidia.
SoftBank’s quarterly earnings disclosure on Tuesday paints a picture of a company that is selling a bunch of easily liquid assets and borrowing money to raise the cash for OpenAI. In addition to the Nvidia shares, SoftBank sold $9.17 billion worth of shares in T-Mobile over the summer and raised another $2.37 billion selling shares in Deutsche Telekom. It also increased the size of the loan facility it has taken out using Arm shares as collateral. And it has sold billions in bonds. (For more on this, see here.)
SoftBank needs money for more than just OpenAI. It has agreed to buy chip design firm Ampere Computing for $6.5 billion, a deal it expects will close by the end of 2025. It has also agreed to buy ABB’s robotics business for $5.38 billion and anticipates completing that deal by mid to late 2026. This is Masa Son at his best, moving his chips around. But in trading Nvidia shares for OpenAI, he has chosen to give up his exposure to the one company that has made a boatload of money on AI—in order to raise his exposure to the one company that is losing a boatload of money on AI. To be sure, OpenAI seems likely to become enormously valuable, given how popular ChatGPT is. But Son may regret not hedging his bets just a little bit.
Musk’s Revolving Door
Working for Elon Musk is so intense that a monthslong stint can feel like years. At least that’s one interpretation of a parting missive from Lily Lim, until today the top lawyer at Musk’s xAI. Lim had been at xAI for just 11 months, the last three of which she was in charge of legal affairs (her predecessor had quit in August). And yet, a post on X today talked as if she’d spent years there.
“Even the best job ever with the universe’s best legal team for xAI’s frontier AI engineering geniuses does come to an end. @xai is moving on from the equivalent of a first stage of an interplanetary rocket ship to a second stage, and so it is time for me to depart. The second stage is going to be just as thrilling!” she said.
A clue as to the real reason for her departure came near the end of the message, when she said that “now that I’m not working 100+/hrs a week,” she’ll have time to swim or relax in other ways.
In Other News
Shares of AI cloud provider CoreWeave dropped 16% on Wednesday after the company said “temporary delays related to a third-party data center developer who is behind schedule” would hurt its revenue in the fourth quarter.
Apple is delaying the release of the second-generation iPhone Air to work on a redesign of the device and make it more appealing to consumers, according to two people with knowledge of the matter. The redesign could include a second camera lens, an attempt to address one of the main complaints.
Yann LeCun, Meta Platforms’ chief AI scientist, intends to leave the social media giant in the coming months to form his own AI startup,Yann LeCun, the Financial Times reported.
Today on The Information’s TITV
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