Please ensure Javascript is enabled for purposes of website accessibility

NVIDIA Buys Arm Holdings From SoftBank for $40 Billion

By Danny Vena – Updated Sep 14, 2020 at 2:08PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This marks the largest acquisition in the company's history.

NVIDIA (NVDA -1.16%) announced a deal yesterday to buy mobile-chip designer Arm Holdings from SoftBank (SFTB.Y -0.60%) in a cash and stock deal valued at $40 billion. Rumors have swirled in recent weeks that a deal was imminent. NVIDIA said the acquisition would be immediately accretive to the company's adjusted gross margin and earnings per share. 

This marks the largest acquisition ever for NVIDIA, far ahead of its $6.9 billion purchase of high-performance computing specialist Mellanox early last year. 

Both the ARM Holdings and NVIDIA logos side by side.

Image source: NVIDIA.

SoftBank will be paid with 44.3 million shares of NVIDIA stock, worth a total of $21.5 billion, giving SoftBank a less than 10% stake in NVIDIA, as well as $12 billion in cash from its balance sheet. There's also a $5 billion earn-out provision subject to Arm meeting certain financial performance targets. 

Arm Holdings made its name designing the mobile chips that power smartphones and tablets and licensing those designs to all comers. But it has been expanding its reach into data centers and artificial intelligence (AI) applications, an area that NVIDIA has dominated in recent years.

"AI is the most powerful technology force of our time and has launched a new wave of computing," said Jensen Huang, CEO of NVIDIA. "In the years ahead, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today's internet-of-people. Our combination will create a company fabulously positioned for the age of AI."

NVIDIA is the undisputed leader in graphics processing units (GPUs) that render realistic images in video games. And in recent years the company has become a powerhouse in the high-performance computing used in data centers, AI applications, and cloud computing, supplying GPUs to each of the leading cloud providers.

Danny Vena owns shares of NVIDIA. The Motley Fool owns shares of and recommends NVIDIA. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Nvidia Stock Quote
$156.39 (-1.16%) $-1.84
SoftBank Group Corp. Stock Quote
SoftBank Group Corp.
$21.38 (-0.60%) $0.13

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.