SoftBank just made one of the year's boldest AI bets, selling its entire $5.8 billion Nvidia stake to fund its massive OpenAI investment. The move comes as 'Big Short' investor Michael Burry warns AI companies are artificially inflating earnings through questionable chip depreciation practices.
SoftBank just executed one of the most counterintuitive moves in AI investing, dumping its entire Nvidia position at what many consider peak valuations. But CEO Masayoshi Son isn't retreating from AI - he's doubling down in a different direction.
The Japanese conglomerate revealed in Tuesday's earnings that it sold 32.1 million Nvidia shares in October for $5.83 billion, completely exiting its position in the chip giant that's become synonymous with the AI boom. At first glance, the timing looks questionable - Nvidia has been one of the market's biggest winners, with its stock climbing over 180% this year alone.
But sources familiar with the transaction tell a different story. According to a person close to the deal who spoke to CNBC, the sale had nothing to do with concerns about AI valuations or Nvidia's prospects. Instead, SoftBank is redirecting that $5.8 billion windfall directly into its massive $22.5 billion commitment to OpenAI.
The move represents a strategic pivot from betting on AI infrastructure to betting on AI applications. While Nvidia provides the chips that power AI training, OpenAI builds the models that consumers and businesses actually use. It's classic Masayoshi Son - always chasing the next transformative platform.
Timing couldn't be more interesting, given the warnings now echoing from Michael Burry, the investor who famously predicted the 2008 financial crisis. Burry posted on X Monday that major AI companies are "understating depreciation" of AI chips, which "artificially boosts earnings - one of the more common frauds of the modern era." He's promising to reveal "more details" on November 25.
Burry's track record gives his warnings weight. His bet against subprime mortgages before the 2008 crisis made him a household name, and his ability to spot financial engineering ahead of market corrections is legendary. If AI companies are indeed manipulating depreciation schedules to inflate earnings, it could signal trouble for the entire sector.
