Softbank sells Nvidia shares and fuels fears of an AI bubble bursting

BarcelonaFears are growing about a bursting of the artificial intelligence (AI) bubble. Japanese technology investor Softbank has sold its stake in NvidiaNvidia, the leading producer of chips for generative AI, for $5.8 billion (approximately €5 billion at the current exchange rate). This transaction has shaken stock markets and fueled fears that the AI frenzy has peaked, especially following recent warnings from Wall Street bank executives. In its quarterly results, the Japanese technology investor announced that it had sold the 32.1 million Nvidia shares it had held since October to finance CEO Masayoshi Son's ambitious AI strategy, centered on a "total" commitment to OpenAI, the company behind it.

SoftBank needs the proceeds from the sale to fund initiatives including the $500 billion Stargate project, which aims to expand the capacity of US data centers for AI, as well as approximately $40 billion pledged to OpenAI, details of which are provided. However, the timing of the sale has exacerbated some investors' doubts about whether valuations in the AI industry have outpaced true fundamentals. The drumbeat of a potential AI bubble has intensified in recent weeks following warnings from the CEOs of Morgan Stanley and Goldman Sachs about a possible stock market correction, while hedge fund manager Michael Burry, known for his short positions against the market, has also weighed in on Nvidia and Palantir.