Markets

SoftBank’s Arm Continues Dream Run as Nvidia Reveals Stake

 

US-listed shares of chip designer Arm Holdings continued to chug upwards on Thursday after chip giant Nvidia disclosed it had acquired a $147.3 million stake in the SoftBank-backed firm.

Arm’s shares on Nasdaq jumped more than 5% during US trade, extending a dream run that has led the chip firm to nearly double its market cap to $137 billion this month.

Shares of Arm dipped nearly 0.5% in early trade but quickly surged once news of Nvidia’s stake emerged.

 

Also on AF: Nvidia Chief Pans Sam Altman’s Trillion-Dollar AI Chip Plan

 

Nvidia disclosed its stakes as of December 31 in a 13F filing late on Wednesday. The third most-valuable US firm disclosed stakes in firms from a range of industries, including biotech, autonomous driving and other AI-based technologies.

Its largest investment, however, was in Arm Holdings.

The US chipmaking giant, and a market leader in cutting-edge AI chips, had failed to buy Arm in 2020 after the $80 billion deal hit the antitrust hurdle two years ago.

Last year, Nvidia also indicated interest in purchasing shares of Arm during its debut in US markets.

 

‘Once-in-a decade momentum’

Nvidia’s disclosure on Thursday came as cherry on the cake for Arm, which has seen its US-listed shares surge more than 95% in just the last seven trading sessions alone.

Much of the gains in Arm’s shares have come on the back of the a continuing AI frenzy, with investors lapping up the stock as another way to bet on the technology.

A better than expected quarterly sales and profit forecast — released last week — was the initial catalyst for the up-move.

The company’s executives said customers were flocking to Arm-based central processors to complement Nvidia’s chips for AI work in data centres, and working on new laptops and smartphones that can handle chatbots and other AI features.

Designing new chips for artificial intelligence work would generate higher royalties for Arm.

Those projections sent the company’s shares soaring by over 50% last Thursday. Frenzy around the stock continued as investors hunted for the ‘next Nvidia,’ one analyst noted.

Meanwhile, a scarcity in shares and a potential short squeeze gave Arm’s share price an added pivot, CNBC noted.

The conditions created a “once-in-a-decade momentum” for Arm, Mehdi Hosseini, an equity research analyst told CNBC.

 

Breather for SoftBank

Now trading at $133.68, Arm has nearly tripled from the $51 price set in its September initial public offering.

Arm CEO Rene Haas and executives at the firm’s initial public offering at Nasdaq Market site in New York. Photo: Reuters

That would make the company one of the most successful investments after Alibaba for Japan’s SoftBank, which has seen much of its money flushed down an array of loss-making tech investments.

Last year, SoftBank reported about $7.2 billion in annual losses for the fiscal ending March 31, 2023. Its technology-focused investment fund posted a record loss of $32 billion.

Those failed stakes, along with China’s crackdown on its technology sector — where a lot of SoftBank investments were parked, proved to be a drag on SoftBank’s shares since early 2021.

But Arm’s soaring shares have also managed to bring some respite to investors in the Masayoshi Son-headed conglomerate.

SoftBank’s Tokyo-listed shares have soared nearly 30% since the up-move in Arm began — a move that has coincided with overall strength in Japanese equities.

Though the stock pared some gains on Friday, it still remains at its highest level since May 2021.

 

  • Vishakha Saxena, with Reuters

 

Also read:

 

After Arm’s Bumper Launch, Who’s Next in SoftBank’s IPO Pipeline?

 

SoftBank Set to Finally See Green as Tech Valuations Jump

 

SoftBank Reveals $5.2bn Loss as WeWork Demise Adds to Woes

 

S&P Cuts SoftBank Rating Deeper Into Junk Over Alibaba Sale

 

SoftBank’s Arm Stresses China ‘Risks’ in $60bn US IPO Filing

 

SoftBank’s Arm Cannot Sell Cutting-Edge Chip Designs to China

 

SoftBank Accused of Deliberately Trashing Social Media App – FT

 

SoftBank Handed App With Fake User Base $170m – engadget

 

 

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at vishakha.saxena@asiafinancial.com

Recent Posts

Biden to Propose Tripling Tariffs on Metal Products From China

President eyes hiking tariffs amid a push for blue-collar votes on a visit to Pittsburgh,…

7 hours ago

Japanese Firms Eye Moves to the US as ‘China Illusion’ Fades

With Japanese firms now wary about investing in China, the US's economic resilience has proven…

8 hours ago

Apple Eyes Indonesia Fab as it Reduces China Reliance – AP

Apple CEO Cook also met Vietnamese Prime Minister Pham Minh Chinh in Hanoi on Tuesday as the…

9 hours ago

IMF Tips 3.2% Global Growth, Warns China on Property Crisis

IMF chief economist says China’s economy is strained by its property crisis and warns that…

9 hours ago

Nikkei Dips on Profit Taking, Hang Seng Flat Despite Rules Boost

Japan’s impending earning season saw investors rushing to cash in while Hong Kong shares were…

10 hours ago

China’s Theft of Trade Secrets Our No1 Concern: US Patent Chief

The US official said US businesses operating in China regularly complain about insufficient protections and…

1 day ago