SoftBank has continued its betting spree in the artificial intelligence arena as reports emerge the giant has a $4 billion stake in graphics chipmaker Nvidia.

Jamie Davies

May 24, 2017

4 Min Read
Softbank said to buy into Nvidia - who's next?

SoftBank has continued its betting spree in the artificial intelligence arena as reports emerge the giant has a $4 billion stake in graphics chipmaker Nvidia.

The investment in Nvidia was sneakily revealed on the weekend, however details were thin on the ground. That said, Bloomberg claims to have a source which pins the stake at $4 billion, accounting for roughly 4.9% of the company. It’s an interesting investment, as 4.9% falls just below the amount which would have required SoftBank to disclose the stake to US regulatory authorities.

Although a moot point now, one could question whether the authorities should have allowed such a transaction to take place. SoftBank already owns ARM, a company considered by some to be the outright leader in the chip world, gaining a seat at the table of a competitor might not have been welcomed by competition authorities. A 4.9% holding in Nvidia puts SoftBank as the fourth largest investor, should the reported amount turn out to be true.

Perhaps another question which might be worth asking is when the investment was actually made in Nvidia? Would the ARM acquisition have been as smooth as it was if this investment was made prior? Would they have disclosed it considering they didn’t have to?

Finally, one might enquire as to how much of a savvy investment this actually was. Currently, we are unsure when the investment into Nvidia was actually made. If it was made six months ago, share price has increased by 45% to date. If it was made 12 months ago, Nvidia’s share price has grown by a whopping 118%. Either way, it’s a good gain.

The move also might confirm the ambitions of SoftBank CEO Masayoshi Son.

“The transaction is a bet on Artificial intelligence, a sector which is rapidly becoming a driving factor in technology M&A, with over 30 acquisitions of Artificial Intelligence taking place in the first quarter of 2017 alone,” said Nick Jones, Partner and Head of technology at Cavendish Corporate Finance.

“This acquisition of shares is another step by SoftBank founder Masayoshi Son to become the world’s biggest technology investor over the next decade and follows investments in Chinese ride-hailing giant, Didi Chuxing, and the Indian digital payments start-up, Paytm.

“This is also likely to be the first of many US investments made by SoftBank in the US, following a meeting with President Trump last December and a pledge to create 50,000 new jobs in by investing $50 billion in start-ups and new companies.”

With regard to the Vision Fund, some may query how the money is actually going to be invested. Admittedly, some of SoftBank’s contributions to the fund are taking the form of company holdings, but the billions left over will have to be spent at some point. Aside from the BioTech space, start-ups don’t need the same vast concentrations and volumes of cash which they did in previous years.

Finding the right investments will be a tricky task, but also making sure that money is not invested frivolously, due the abundance, is another problematic, if unexpectedly unusual one. It’s a nice problem to have though.

As one of the most important characters buzzing around the fund, Son is set to become one of the most influential men in the artificial intelligence, if not the wider tech, world.

“Most of our investments will range between 20 and 40 percent, making us the largest shareholder and board member, in a position to discuss strategy with the founders,” said Son, in an interview with Bloomberg a couple of months back.

This was prior to the fund becoming a reality, and some pessimists might have whispered dissent under their breath, as they laughed at the concept of a $100 billion fund. But now the fund it real. And so is the $93 billion to spray around as well.

If Son is one of the most influential persons encamped in the fund, and the fund is looking to create influential positions (or pressurizing, depending on if you’re a glass half full/empty person) in a currently undefined number of technology companies, that is a lot of influence for one single individual to have.

We’re hoping Son isn’t a fan of the Terminator franchise.

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