SoftBank is selling its entire stake in Nvidia — but not for the reasons you might think.
In its earnings statement released Tuesday, the Japanese group said that it had sold 32.1 million Nvidia shares in October for $5.83 billion.
At first blush, this could be read as a sign that Nvidia's high valuations are causing SoftBank some unease. And if SoftBank — which infamously pumped $18.5 billion into WeWork only to value it at $2.9 billion eventually — is tamping down on its usual optimism regarding its investments, then retail traders should probably pay attention.
Adding to such worries are comments by Michael Burry — who bet against subprime mortgages before they caused a whole financial crisis in 2008 — on major artificial intelligence companies.
Burry wrote Monday in a post on X that those firms are "understating depreciation" of AI chips, which "artificially boosts earnings — one of the more common frauds of the modern era." CNBC could not independently confirm that companies were practicing this.
This doesn't seem to be SoftBank's concern, however. A person familiar with the group's sale told CNBC that it had nothing to do with AI valuations. On the contrary, cash from offloading Nvidia chips will be redirected to SoftBank's $22.5 billion investment in OpenAI, the person said.
Burry said in his post that he will reveal "more details" on Nov. 25, and exhorted readers to "stay tuned." That might not be enough enticement for SoftBank CEO Masayoshi Son.
— CNBC's Yun Li, April Roach and Dylan Butts contributed to this report.
What you need to know today
The Dow Jones Industrial Average closes at a fresh high. The S&P 500 also rose on Tuesday stateside, but the Nasdaq Composite retreated as investors rotated out of tech. Asia-Pacific markets mostly rose Wednesday, though Softbank shares sank as much as 10%.
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AMD sees 35% annual growth. CEO Lisa Su said Tuesday that the chipmaker's revenue over the next three to five years will be driven by "insatiable" demand for AI chips. Gross margins would be between 55% to 58%, higher than analysts expected.
Elements of U.S.-China trade deal took effect Monday. Washington extended for a year its agreement to keep its "reciprocal" tariff rate at 10%. In return, Beijing rolled back several restrictions on the export of rare earths. But analysts say the truce remains fragile.
[PRO] Time to sell Pop Mart? Shares of the Chinese firm have surged more than 270% year to date on the back of its Labubu dolls' popularity. Bernstein analysts think it could be time to stop collecting Pop Mart stock.
And finally...
Ms. Jo Malone CBE is one of Britain's most celebrated entrepreneurs, but her path to success was anything but easy.
"I kept saying to myself, when I grow up, I'm not going to live like this," she told CNBC's Steve Sedgwick in a candid conversation on the "Executive Decisions" podcast.
Raised on a council estate outside London, Malone faced a turbulent home life and took on the responsibility of managing her family's finances from a young age.
Watch or listen to "Executive Decisions" wherever you get your podcasts.
— Steve Sedgwick
