SoftBank Sells Nvidia Stake for $5.8 Billion to Fund AI Bets

Economic

Summary:

SoftBank sold its entire $5.8B Nvidia stake to fund major AI investments, including data centers and robotics. The sale boosts liquidity as SoftBank expands stakes in OpenAI and other AI ventures despite bubble concerns.

SoftBank Group Corp. sold its entire stake in Nvidia Corp., pocketing $5.83 billion to help bankroll envisioned AI investments at a time investors are questioning the sheer amounts of capital chasing a technology with uncertain future returns.

The Nvidia stake sale highlights how founder Masayoshi Son needs money to chase a plethora of projects that range from Stargate data centers to AI robot manufacturing sites in the US. Its exit coincides with a growing debate about whether spending by big tech firms from Meta Platforms Inc. to Alphabet Inc. — expected to surpass $1 trillion in coming years — will produce commensurate returns. Nvidia’s stock was down 1.3% in pre-market trading.

SoftBank is keen to become a leading player in that growing ecosystem, with plans to leverage stakes in sector linchpins from OpenAI to US chip designer Ampere Computing LLC. On Tuesday, SoftBank executives sidestepped questions about whether the industry is fomenting an AI investment bubble, and said the sale had nothing to do with Nvidia itself but was a necessary financing measure.

“I can’t say if we’re in an AI bubble or not,” Chief Financial Officer Yoshimitsu Goto said during an earnings conference Tuesday. SoftBank sold Nvidia “so that the capital can be utilized for our financing,” he added, without elaborating.

SoftBank has sold out of Nvidia once before, in 2019. The company resumed buying small stakes in Nvidia in 2020 — two years before the advent of ChatGPT ignited a historic rally. It disclosed that it increased its stake in the US chipmaker to around $3 billion at the end of March. It’s done well just on that measure: Nvidia has gained more than $2 trillion of market value since.

That rally, along with its investment in OpenAI, helped prop up SoftBank’s bottom line. The Japanese company reported a surprise net income of ¥2.5 trillion ($16.2 billion) in its fiscal second quarter, far outrunning the average of analyst estimates of ¥418.2 billion. OpenAI’s value has risen $14.6 billion since SoftBank invested, Goto said.

SoftBank Sells Nvidia Stake for $5.8 Billion to Fund AI Bets_1

SoftBank is on track to report its highest annual profit since 2020, Bloomberg Intelligence analyst Kirk Boodry said. “The sale of $5.8 billion in Nvidia shares highlights the company’s access to liquidity as it continues its AI investment program,” he added.

Son’s initiatives — which include the Stargate data center rollout as well as a $1 trillion AI manufacturing hub in Arizona — have seen the billionaire court US President Donald Trump, as well as the chiefs of Taiwan Semiconductor Manufacturing Co. and South Korean conglomerates. SoftBank even explored a takeover of US chipmaker Marvell Technology Inc. earlier this year.

Son’s company now boasts a portfolio that includes some of the world’s most sought-after names in AI, including OpenAI, ByteDance Ltd. and Perplexity AI Inc. Those stakes boosted SoftBank’s paper gains and helped drive a 78% surge in its share price over the three months ending in September — its best such performance since the December quarter of 2005.

The company also announced a 4-for-1 stock split that will take place Jan. 1 in a move that helps make its stock accessible to Japanese retail investors.

SoftBank Sells Nvidia Stake for $5.8 Billion to Fund AI Bets_2

The challenge will be to balance the financing behind a flurry of deals it’s signed, as well as any new initiatives Son may take on in coming months.

Through its Vision Fund 2, SoftBank will now invest the full $22.5 billion it’s promised OpenAI in December and remove the preconditions it had previously set. SoftBank has plans to acquire US chip designer Ampere Computing LLC for $6.5 billion and has agreed to buy ABB Ltd.’s robotics arm for $5.4 billion.

The company expanded a margin loan using its Arm Holdings Plc shares to $20 billion from $13.5 billion, of which $11.5 billion remains available. It’s also obtained a bridge loan of $8.5 billion to fund its injection into OpenAI, as well as another bridge loan for the Ampere deal, it said.

“The simple trade was to buy SoftBank for cheap exposure to Arm shares and a broader AI and tech mix. That idea has more than delivered – the stock’s more than doubled, far outpacing the modest rise in NAV,” according to a Finimize Research note published on Smartkarma ahead of the earnings release, referring to SoftBank’s net asset value.

“But now the discount’s mostly closed, so SoftBank isn’t a ‘cheap’ way in anymore. So on that basis, it’s likely a good time to sell and take your profits,” it said.

Source: Bloomberg

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Political

Economic

A son of former Libyan dictator Muammar Qaddafi was freed in Lebanon, almost a decade after he was detained on accusations that he had a role in the 1970s disappearance of a prominent Islamic cleric during his father's reign.

Hannibal Qaddafi was released on bail of $893,000, according to the Lebanese state-run news agency NNA. He had been in custody after being charged with "withholding information" in the case of the kidnapping of Musa al-Sadr and two of his associates, NNA reported.

Gunmen kidnapped him in December 2015 after dangling a fake offer of a newspaper interview and transferring him to neighboring Lebanon. According to Human Rights Watch, he was tortured for information on Al-Sadr's disappearance — which occurred when he was only two years old.

The unknown fate of al-Sadr, an influential Lebanese Shia cleric and politician who vanished with the two associates on a visit to Libya in 1978, has long hindered relations between the Arab nations. The feud continued even after the 2011 civil war in which Qaddafi was overthrown and killed after four decades in power.

Last week, Libya's internationally-recognized government said Lebanese authorities had decided to free Hannibal, 49, following diplomatic efforts. Lebanon in the past accused Muammar Qaddafi of being behind al-Sadr's disappearance — a claim Libyan authorities denied.

The youngest of the former Libyan ruler's five sons, Hannibal fled to Algeria with his wife and some siblings in the wake of the conflict, eventually finding asylum in Syria.

Lebanese security forces took custody of him in December 2015, and he was later charged with "withholding information and subsequently interfering in the crime of continued kidnapping," said the advocacy group, which has long urged his release.

He has never faced a formal trial on the charges. In 2018, a Lebanese court handed him a 15-month prison sentence in a separate case for insulting the judiciary.

A delegation representing Libyan Prime Minister Abdelhamid Dbeibah visited Beirut this month for talks with Lebanese officials on his potential release.

Source: Bloomberg Europe

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Adam

Economic

U.S. stock futures point broadly lower, with the possible end of a federal government shutdown in focus. The U.S. Senate votes in favor of a bill to re-open the government after a selection of Democrats break with their party to back the measure. AI cloud services group CoreWeave trims its annual revenue forecast, while Japanese tech investment giant SoftBank’s quarterly profit surpasses expectations.

Futures subdued

U.S. stock futures were hovering below the flatline on Tuesday as investors assessed the potential end to a prolonged federal government shutdown.

By 02:42 ET (06:42 GMT), the Dow futures contract was mostly unchanged, S&P 500 futures were lower by 7 points, or 0.1%, and Nasdaq 100 futures had slipped by 42 points, or 0.2%.

The main averages on Wall Street ended higher in the prior session, spurred on by hopes that lawmakers in Washington were close to ending an historically-long shutdown of the U.S. government.

Analysts at Vital Knowledge added that the narrative around artificial intelligence has remained bolstered by “bullish” expectations for earnings later this month from key tech industry players, including AI-darling Nvidia.

Still, the outlook for further interest rate cuts by the Federal Reserve this year is murky, with one official at the central bank suggesting on Monday that room for more reductions is now limited.

Senate approves bill to end government shutdown

The U.S. Senate voted to send a spending package which would end the longest-ever federal government shutdown to the House of Representatives, as eight Democrats provided the support needed to break the impasse.

Republicans, who control both the Senate and the House, are anticipated to continue backing the bill, which has received the blessing of the Trump administration.

Criticism was directed by some Democratic Party figures at its members who voted in favor of the legislation, which will extend government funding until January 30, set aside a year’s worth of funding for the Agriculture Department, the legislative branch and military construction, and guarantee the reversal of federal worker layoffs triggered by the shutdown. Democrats had been demanding that any deal to re-open the government comes with guarantees that Republicans would lift a deadline that could heavily impact healthcare for millions of Americans. GOP leaders, for their part, have vowed to hold a vote on the matter by mid-December.

Democrats have been hitting out at President Donald Trump over what they perceive to be efforts by the White House to deny food assistance and dent domestic air travel as a device to force negotiations to end the shutdown. Administration officials, meanwhile, have been arguing that the shutdown has made it slash spending and draw down the number of domestic flights to secure safe air travel.

CoreWeave trims revenue outlook

Shares of CoreWeave fell in extended hours trading after the Nvidia-backed AI cloud services firm flagged a delay at a third-party data center partner.

CoreWeave reduced its full-year revenue forecast as a result. CFO Nitin Agrawal said that the company now expects its top-line result to be between $5.05 billion and $5.15 billion in its 2025 fiscal period, compared to previous projections of $5.15 billion to $5.35 billion. Analysts had anticipated guidance of $5.29 billion, according to LSEG data cited by Reuters.

The update overshadowed otherwise solid third-quarter results from the group, which has recently moved to fortify its position in the AI boom through a series of multibillion-dollar deals with major tech industry names like ChatGPT maker OpenAI and Facebook owner Meta Platforms. CoreWeave’s stock has spiked since its flotation earlier this year.

Quarterly revenue surged to a better-than-expected $1.36 billion, as demand for its AI cloud offerings was strong.

Adjusted operating income margin, however, dipped to 16% from 21% a year ago, while Agrawal -- echoing a wider trend in the AI segment -- outlined plans to ratchet up capital expenditures next year. In 2025, it expects to spend $12 billion to $14 billion.

SoftBank reports

SoftBank Group Corp. clocked a much stronger-than-expected fiscal second-quarter profit, as the Japanese tech conglomerate continued to reap strong returns from its aggressive bets on artificial intelligence.

The company said it had sold all of its shares in Nvidia -- about 32.1 million shares -- for $5.83 billion in October. The sale was not reflected in SoftBank’s second-quarter earnings, and the company did not disclose a rationale for the sale.

SoftBank posted a net profit attributable of 2.502 trillion yen ($16.3 billion) for the July-September quarter, much higher than Bloomberg estimates of 418.23 billion yen. Softbank’s profit also more than doubled from the 1.179 trillion yen seen last year.

The earnings were fueled chiefly by gains on investments at the company’s flagship Vision funds, the second of which continued to carry out its investment commitments in OpenAI during the quarter.

China eyeing plan to restrict U.S. military from its rare earths - WSJ

China is preparing measures to ease the flow of rare earths and other critical materials to the U.S. military, the Wall Street Journal reported on Tuesday, citing people familiar with the plan.

Bejing plans to establish a “validated end-user” system to exclude companies with ties to the U.S. military from receiving its rare earths, while fast-tracking shipments to other, civilian firms, the WSJ reported.

The system will allow China to follow through on President Xi Jinping’s recent pledge to U.S. President Donald Trump to resume the flow of rare earths to the world’s largest economy.

Such a system could make importing Chinese materials even tougher for U.S. companies with civilian and defense clients.

Rare earths are used in a variety of applications, from consumer electronics to defense equipment. China is the world’s largest supplier of the materials, and has used its dominance as a major bargaining chip in its renewed trade conflict with the United States.

Source: investing

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Warren Takunda

Economic

The Australian dollar strengthened after a hawkish address by Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser reinforced expectations that the central bank will maintain a restrictive stance for longer.

Hauser delivered what FX analysts at Crédit Agricole describe as "a hawkish assessment of the potential paths for the Australian economy in the coming year."

The Deputy Governor said the RBA faces "significant uncertainty about the path of the economy and therefore its forecasts", noting that the economy is operating with "much less spare capacity than it has over the past 40 years when beginning an economic recovery".

"Australia’s abysmal productivity growth … is a large part of the reason for this lower speed limit," he said, outlining three potential paths for the economy.

The first assumes more spare capacity than the RBA currently estimates, allowing inflation to fall back as expected and opening the door to several rate cuts.

The second, which the bank favours, assumes a lower speed limit where the pick-up in demand over recent months is already testing capacity, meaning inflation proves more resilient and no further cuts occur.

Australian Dollar Bolstered by Hauser's Speech_1

Above: GBP/AUD falls amidst renewed AUD strength.

The third scenario envisages a more optimistic outcome in which productivity improves, capacity expands and growth continues without adding inflationary pressure.

Credit Agricole says "scenarios one and three would lead to further RBA rate cuts, number one perhaps several more and number three maybe one more cut."

These would be consistent with a weaker AUD profile.

However, under scenario two – which it believes most likely – "no more rate cuts" would take place.

"The AUD and the Australian rates market is agreeing with us and has pushed Australian rates and the currency higher on the back of Hauser’s speech," says Crédit Agricole analyst David Forrester.

According to Forrester, Hauser’s emphasis on capacity limits and poor productivity highlights the risk that Australia’s recovery could quickly run up against inflation constraints.

That prospect has encouraged investors to scale back expectations for further easing, keeping the Australian dollar supported.

He says the next key test will come from Australian labour market data due Thursday, which "could easily see the market swing back towards scenario one" if signs of weakness appear.

Until then, Credit Agricole believes the Australian dollar will remain underpinned by the perception that the RBA is likely to remain cautious and that policy divergence will continue to favour the currency.

Source: Poundsterlinglive

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Adam

Stocks

Investors piled back into artificial intelligence names on Monday stateside. Shares of Nvidia jumped 5.8%, Broadcom advanced 2.6% and Microsoft climbed 1.9% to end its eight-day losing streak, its longest consecutive decline since 2011.

Market watchers are hoping that another historically long streak — the U.S. government shutdown — could soon be snapped as well. The U.S. Senate has voted in favor for a deal to reopen the government, though it still has to pass through the House and then be signed into law by President Donald Trump (who has already given it his approval).

That’s not to say worries about AI’s high valuations have gone away completely.

CoreWeave on Monday reported its third-quarter earnings. It rents out Nvidia cards to AI-related firms, such as Google and Microsoft, a business model that ties it intimately to the AI trade. The company’s revenue swelled 134% year on year, but it still reported a net loss and gave lower-than-expected guidance for this year.

The general shape of those figures — high revenue and high losses — broadly reminds one of OpenAI, the industry-leading, money-bleeding startup that kickstarted the AI frenzy. Though it would of course be a stretch to equate the two companies and the factors driving their finances.

Still, Mark Haefele, CIO of UBS’s global wealth management, thinks “AI-related stocks should drive equity markets.” With the U.S. government shutdown in sight to end (hopefully this doesn’t jinx it), that’s another obstacle surpassed for markets.

What you need to know today

Technology stocks lead gains. Major U.S. indexes rose Monday stateside, with the Nasdaq Composite

jumping 2.27%. Asia-Pacific markets fell Tuesday, retreating from earlier gains, but shares of Chinese EV maker Xpeng surged more than 16%.

SoftBank and Sony top fiscal second-quarter earnings estimates. SoftBank reported its Vision Fund gained $19 billion during the period, while Sony also announced a share buyback of up to 100 billion Japanese yen ($648 million).

Fed Governor Stephen Miran urges for a half-point cut. In an interview with CNBC, Trump-appointee Miran said that a rate reduction of that size is “appropriate” because policy should be tailored to where “the economy is going to be.”

U.S. lawmakers vote for shutdown deal. The Senate on Monday night stateside passed a bill to fund and reopen the government, though it would still have to be voted in favor by the House of Representatives.

[PRO] Novo Nordisk’s rocky road ahead. In recent weeks, the pharmaceutical giant pulled out of a bidding war for biotech firm Metsera, said it would replace its independent board directors and lowered its growth outlook. Here’s what analysts are saying about the firm’s prospects.

And finally...

Russian President Vladimir Putin last week ordered his officials to complete a road map by Dec.1 “for the long-term development of the extraction and production of rare and rare earth metals.”

Moscow has fallen behind peers like China when it comes to the exploitation of its deposits of rare earth elements. While lagging behind the big players, Russia is still estimated to possess the fifth largest known reserves of rare earths, totaling 3.8 million tonnes, the United States Geological Survey stated. That’s above the U.S. which is seen with 1.9 million tonnes.

Source: cnbc

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Adam

Forex

The U.S. dollar rose against the safe-haven yen and versus the growth-sensitive Australian dollar on Tuesday as investors grew more cautious on risk and shifted their focus to data expected once the U.S. government shutdown ends.

In early Asian trade, the yen touched its weakest level since February, while the risk-sensitive Australian currency held firm against the greenback.

In recent days, risk-sensitive currencies such as the Australian dollar and British pound have gained, while safe-haven currencies like the yen have softened as hopes for a quick end to the U.S. government shutdown boosted appetite for risk.

Market participants expect the U.S. closure to end in the next few days after the U.S. Senate on Monday approved a compromise that would restore funding for federal agencies and would stall President Donald Trump's campaign to downsize the federal workforce.

FACTORING IN AN END TO THE SHUTDOWN

A strong run of economic indicators will help clarify the outlook for the U.S. economy and the Federal Reserve policy path.

“Our expectation is that the economy is holding up nicely, and inflation is passing through in a quite moderate way,” said Isabelle Mateos y Lago, group chief economist BNP Paribas, arguing that this scenario should allow the Fed to cut by 25 basis points in December and then be more cautious going into 2026.

“Our reading of the economy is we're still in this low-hire, low-fire mode, with no great signs of stress. But let's see what the data says,” she added.

The deal to end the shutdown now heads to the House, where Speaker Mike Johnson has said he would like to pass it as soon as Wednesday and send it on to President Donald Trump to sign into law.

"There will be little sense of direction in the coming days: reopening prospects allow markets to price out the negative growth impact, but a resumption of data releases in the U.S. does carry non-negligible downside risks to the dollar," said Francesco Pesole, forex strategist at ING.

"We think markets are underestimating the downside risks for the labour market, U.S. front-end rates and, by extension, the dollar into year-end," he added.

The euro was roughly unchanged at $1.1555.

"The bottom line is that the end of the government shutdown will help avoid a more severe gross domestic product and corporate earnings slowdown," said Thierry Wizman, global forex and rates strategist at Macquarie Group.

STERLING DIPS, YEN UNDER PRESSURE

Sterling fell 0.40% to $1.3126 after data showed Britain's labour market cooled noticeably in the third quarter.

The dollar rose 0.10% to 154.28 against the yen , after hitting 154.495, the highest level since February.

The yen was under pressure after Japan's new Prime Minister Sanae Takaichi called for policymakers to go slow on interest rate hikes at the same time as U.S. policymakers have turned cautious on further cuts.

The greenback dropped 0.25% to 0.6520 against the Australian dollar , snapping a two-day rising streak.

The Swiss Franc was on track for its fourth straight daily rise after Trump said the U.S. was working with Switzerland on a deal to lower the 39% tariff rate.

The Swiss currency was up 0.15% to 0.8035.

Source: reuters

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Warren Takunda

Economic

The Senate passed legislation Monday to reopen the government, bringing the longest shutdown in history closer to an end as a small group of Democrats ratified a deal with Republicans despite searing criticism from within their party.

The 41-day shutdown could last a few more days as members of the House, which has been on recess since mid-September, return to Washington to vote on the legislation. President Donald Trump has signaled support for the bill, saying Monday that “we’re going to be opening up our country very quickly.”

The final Senate vote, 60-40, broke a grueling stalemate that lasted more than six weeks as Democrats demanded that Republicans negotiate with them to extend health care tax credits that expire Jan. 1. The Republicans never did, and five moderate Democrats eventually switched their votes as federal food aid was delayed, airport delays worsened and hundreds of thousands of federal workers continued to go unpaid.

House Speaker Mike Johnson urged lawmakers to start returning to Washington “right now” given shutdown-related travel delays, but an official notice issued after the Senate vote said the earliest the House will vote is Wednesday afternoon.

“It appears our long national nightmare is finally coming to an end,” said Johnson, who has kept the House out of session since mid-September, when the House passed a bill to continue government funding.

How the stalemate ended

After weeks of negotiations, A group of three former governors — New Hampshire Sen. Jeanne Shaheen, New Hampshire Sen. Maggie Hassan and Independent Sen. Angus King of Maine — agreed to vote to advance three bipartisan annual spending bills and extend the rest of government funding until late January. Republicans promised to hold a vote to extend the health care subsidies by mid-December, but there was no guarantee of success.

Shaheen said Monday that “this was the option on the table” after Republicans had refused to budge.

“We had reached a point where I think a number of us believed that the shutdown had been very effective in raising the concern about health care,” she said, and the promise for a future vote “gives us an opportunity to continue to address that going forward.”

The legislation includes a reversal of the mass firings of federal workers by the Trump administration since the shutdown began on Oct. 1. It also protects federal workers against further layoffs through January and guarantees they are paid once the shutdown is over.

In addition to Shaheen, King and Hassan, Democratic Sen. Tim Kaine of Virginia, home to tens of thousands of federal workers, also voted Sunday in favor of moving forward on the agreement. Illinois Sen. Dick Durbin, the No. 2 Democrat, Pennsylvania Sen. John Fetterman and Nevada Sens. Catherine Cortez Masto and Jacky Rosen also voted yes. All other Democrats, including Senate Democratic leader Chuck Schumer of New York, voted against it.

The moderates had expected a larger number of Democrats to vote with them as 10 to 12 Democratic senators had been part of the negotiations. But in the end, only five switched their votes — the exact number that Republicans needed. King, Cortez Masto and Fetterman had already been voting to open the government since Oct. 1.

Many Democrats call the vote a “mistake”

Schumer, who received blowback from his party in March when he voted to keep the government open, said he could not “in good faith” support it after meeting with his caucus for more than two hours on Sunday.

“We will not give up the fight,” Schumer said, adding that Democrats have now “sounded the alarm” on health care.

Independent Sen. Bernie Sanders of Vermont, who caucuses with the Democrats, said giving up the fight was a “horrific mistake.” Sen. Chris Murphy, D-Conn., agreed, saying that voters who overwhelmingly supported Democrats in last week’s elections were urging them to “hold firm.”

House Democrats swiftly criticized the Senate.

Texas Rep. Greg Casar, the chairman of the Congressional Progressive Caucus, said a deal that doesn’t reduce health care costs is a “betrayal” of millions of Americans who are counting on Democrats to fight.

Others gave Schumer a nod of support. House Democratic leader Hakeem Jeffries had criticized Schumer in March after his vote to keep the government open. But he praised the Senate Democratic leader on Monday and expressed support for his leadership throughout the shutdown.

“The American people know we are on the right side of this fight,” Jeffries said Monday, pointing to Tuesday’s election results.

Health care debate ahead

It’s unclear whether the two parties would be able to find any common ground on the health care subsidies before a promised December vote in the Senate. House Speaker Mike Johnson, R-La., has said he will not commit to bringing it up in his chamber.

On Monday, Johnson said House Republicans have always been open to voting to reform what he called the “unaffordable care act” but again did not say if they would vote on the subsidies.

Some Republicans have said they are open to extending the COVID-19-era tax credits as premiums could skyrocket for millions of people, but they also want new limits on who can receive the subsidies. Some argue that the tax dollars for the plans should be routed through individuals.

Senate Appropriations Committee Chairwoman Susan Collins said Monday that she’s supportive of extending the tax credits with changes, like new income caps. Some Democrats have signaled they could be open to that idea.

“We do need to act by the end of the year, and that is exactly what the majority leader has promised,” Collins said.

Other Republicans, including Trump, have used the debate to renew their yearslong criticism of the law and called for it to be scrapped or overhauled.

In a possible preview, the Senate voted 47-53 along party lines Monday not to extend the subsidies for a year. Majority Republicans allowed the vote as part of a separate deal with Democrats to speed up votes and send the legislation to the House.