SoftBank Reportedly Grabs $4 Billion Stake In Surging NVIDIA
How big are we talking about? Try $4 billion, which gives SoftBank a 4.9 percent stake in NVIDIA. SoftBank is now the fourth-largest shareholder in the graphics chipmaker. While it is a massive investment, that amount is just a smidgen less than what would otherwise require a regulatory disclosure in the United States. It is also in line with SoftBank founder Masayoshi Son's desire to be a leading investor in technology.
Just last year, SoftBank purchased ARM Holdings for $31.4 billion in cash. At the time, the price SoftBank paid represented a 43 percent premium over the closing price of ARM's shares a week prior to inking the deal. Fast forward not quite a year later and SoftBank is again reaching deep into its pockets, this time taking out a few billion dollars to own a chunk of NVIDIA while the company is on a roll.
The question is, did SoftBank overpay for its stake in NVIDIA? That depends on who you ask. NVIDIA's share price tripled last year and is up 28 percent this year. It is currently trading at nearly $138 per share, giving the company a market capitalization of nearly $82 billion. If NVIDIA can keep the momentum going, SoftBank's massive investment will have been a savvy one.
One thing working in NVIDIA's favor is that it has a diversified portfolio. While gaming GPUs is still the company's bread and butter, it has seen steady gains in other areas. One example is the data center. NVIDIA's data center revenue has grown from $72 million the second quarter of 2016 to $409 million in the most recent quarter. Meanwhile, it's auto division added another $140 million to the pile.