SoftBank Ditches Nvidia for OpenAI. Is Leveraging a 'SoftBank Discount' to Back OpenAI's Future a Smart Play?

TradingKey - SoftBank Group's net profit more than doubled in the third quarter of 2025, driven by substantial gains from its investment in OpenAI. This surge follows the conglomerate's decision to liquidate its Nvidia stake and increase its bet on OpenAI, a strategic pivot that now tightly links SoftBank's market valuation to the AI firm's growth and is drawing market scrutiny.

SoftBank Group reported its Q2 earnings (calendar Q3) on November 11. The Japanese holding company's net profit for July to September surged 112% year-over-year to 2.5 trillion yen (approximately $16.2 billion), significantly exceeding the Bloomberg consensus analyst forecast of 418.2 billion yen.

This impressive net profit growth was fueled by SoftBank's investments in Nvidia, Oracle, and the unlisted OpenAI. As Nvidia and Oracle shares hit new highs, SoftBank's stock also climbed, gaining 78% during the third quarter.

Notably, SoftBank's Vision Fund segment recorded 3.5 trillion yen in investment gains in Q3, with OpenAI alone contributing 2.16 trillion yen.

SoftBank Group recently announced it liquidated all 32.1 million Nvidia shares in October, realizing $5.83 billion. This portfolio adjustment was somewhat unexpected, especially given Masayoshi Son's stated ambition to become the "absolute king" in AI platform competition and prevailing Wall Street concerns about an AI bubble.

However, considering SoftBank's history of exiting its Nvidia position in early 2019, this latest move might simply be a strategic play to lock in gains and flexibly adjust its portfolio.

The active buyer in the U.S. AI sector still holds stakes in semiconductor companies such as Arm, TSMC, Oracle, and Ampere. Furthermore, it is actively raising capital to expand its AI investments.

SoftBank's October commitment of an additional $22.5 billion investment in OpenAI is the latest indication of its pursuit of a "pure-play AI empire." However, similar to other companies participating in the OpenAI-led "AI closed-loop economy," analysts are debating the implications of SoftBank's deeper integration with OpenAI.

The persistent "SoftBank discount," where its market capitalization trades below its net asset value, has made the conglomerate a low-cost vehicle for investors to gain exposure to a wide range of AI deals.

Ahead of SoftBank's earnings release, Citibank raised its target price for the stock, citing OpenAI's valuation, which it estimates could reach $500 billion to $1 trillion. CLSA anticipates that even if OpenAI's valuation hits $1 trillion, SoftBank's stock would still trade at a 25% discount to its underlying asset value.

Based on this rationale, a closer alignment with OpenAI could potentially boost SoftBank's market capitalization, thereby providing impetus to narrow its discount.

Nonetheless, Finimize Research cautions that after SoftBank's stock more than doubled this year, this discount has largely evaporated, suggesting SoftBank may no longer be a cheap entry point for investors.

MST Financial identifies risks in SoftBank's strategy, particularly concerning OpenAI's growth outlook. The firm expresses concern that demand for ChatGPT may have peaked.

Similarly focused on AI chatbots, Anthropic, which has been more cautious about expanding its AI computing capacity, might achieve profitability much faster than OpenAI. OpenAI has, in recent months, enlisted multiple tech giants to build an "AI closed-loop economy." This ecosystem inherently exposes all participants to the prospect of ChatGPT requiring continuous explosive growth, which itself presents a significant risk.

Furthermore, SoftBank faces increasing financial pressure to fulfill its approximately $28 billion in investment commitments to OpenAI and other companies.

Analysts project that SoftBank, with a funding capacity of just $58.5 billion, may have already committed to $113 billion in investments. Consequently, it may need to withdraw funds from its Vision Fund or sell stakes in SoftBank and Arm to secure the necessary financing.

Therefore, while investing in the unlisted AI unicorn OpenAI could offer SoftBank significant potential returns, the ability of OpenAI to maintain its leading position in the highly competitive AI race, alongside SoftBank's ongoing financing efforts, remains subject to real-world scrutiny.