SoftBank's Nvidia Exit Sparks AI Valuation Debate Amid Turbulent Market Shifts

Wall Street's AI sector faced turbulence on November 11, 2025, as Nvidia Corporation (NVDA) shares dipped 1.1% in premarket trading following SoftBank Group's surprise exit from a stake in the chipmaker. Despite the decline, the stock remained resilient, trading at $196.05 and maintaining a staggering $4.85 trillion market capitalization. The move underscored growing debates over AI valuation and capital rotation amid surging demand for computing power.

SoftBank's Vision Fund had initially invested $4 billion in Nvidia in 2017 before exiting in 2019, only to re-enter and now exit again. Analysts noted the decision highlighted diverging views on whether AI's explosive growth can sustain current valuations. Meanwhile, BofA Securities reiterated a "Buy" rating for Nvidia, citing its "full-stack, rack-scale execution in large AI clusters" and projecting a $275 price target. The firm emphasized Nvidia's 71.55% year-over-year revenue growth and a trailing P/E ratio of 53.93, calling its valuation "compelling" for the fastest-growing sector.

Nvidia's dominance faces scrutiny ahead of its November 19 earnings report, which is expected to show $54.8 billion in Q3 revenue-a 17% quarter-over-quarter increase. Analysts forecast normalized earnings per share of $1.25, driven by expanding profit margins. However, challenges loom, including declining market share in China due to U.S. export restrictions and rising competition from custom AI chips developed by hyperscalers like Google and Amazon. Rivals such as AMD and Intel are also gaining traction with advanced accelerators.

The broader AI sector remains under pressure from shifting capital flows. Bitcoin's decline below $97,000 and spot ETF outflows totaling $622 million this week signaled a "capitulation phase" in crypto markets, while institutional investors reassessed risk. Yet, Nvidia's robust financials-52.41% profit margins and $46.74 billion in Q2 revenue-continue to attract bullish sentiment. With 64 "Strong Buy" analyst ratings and an average price target of $230.78, the stock's near-term outlook remains optimistic. According to analysis, the stock's resilience continues despite market headwinds.

Looking ahead, Nvidia's ability to navigate geopolitical risks and maintain its technological edge will be critical. As BofA noted, the company's "unparalleled position in the AI cycle" could justify its premium valuation, but execution risks in China and cloud spending cycles could test investor confidence.