SoftBank shares surge to record on AI-fuelled profit recovery

TOKYO – SoftBank Group’s shares surged to a record after it swung to a quarterly profit, an affirmation for Mr Masayoshi Son’s bets on artificial intelligence (AI) players such as Nvidia.  

It reported net income of 421.82 billion yen (S$3.7 billion) in its fiscal first quarter, more than double the average of analyst estimates. The Vision Fund logged a 451.39 billion yen profit, helped by a recovery in tech valuations and gains on holdings such as Coupang, Auto1 Group and Symbotic. 

SoftBank’s earnings received an additional boost from paper gains on its recent purchases of stock in Nvidia and Taiwan Semiconductor Manufacturing Co (TSMC).

The Japanese company increased its stake in Nvidia to more than US$3 billion (S$3.85 billion) as at end-March, helping the Japanese investor benefit from the AI accelerator maker’s 46 per cent rally during the three months through June. 

The 67-year-old SoftBank founder seeks to play a more central role in the spread of AI.

Central to that push is its chip design unit Arm Holdings and a US$500 billion Stargate data centre foray in the US with OpenAI, Oracle and Abu Dhabi’s tech investment fund MGX.

That Stargate push has been somewhat delayed, chief financial officer Yoshimitsu Goto said, conceding for the first time that the US$500 billion AI tie-up with OpenAI was behind schedule. SoftBank will soon begin concrete talks on its first Stargate project, he added.

SoftBank was not involved in OpenAI’s data centre plans in Norway, while OpenAI was leading the roll-outs in the United Arab Emirates and Abilene, Texas, Mr Goto said. Some of the conversations behind Stargate have slowed due to market volatility, uncertainty around US trade policy and questions around the financial valuations of AI hardware, Bloomberg News reported in May. 

As part of its multipronged push into AI, SoftBank is slated to invest as much as US$30 billion in OpenAI, and it has inked a US$6.5 billion deal to buy chip designer Ampere Computing Holdings. Mr Son is also courting TSMC and others about taking part in a US$1 trillion AI manufacturing hub in Arizona.

SoftBank’s shares closed at a new high ahead of the earnings release. US President Donald Trump’s threat to unleash 100 per cent chip tariffs but exempt companies moving production to America is infusing optimism for the Stargate project. 

Mr Ashwin Binwani, founder of Alpha Binwani Capital, said: “Our longer-term outlook for SoftBank Group is cautiously optimistic, with a consensus towards continued business expansion.” But concern over whether SoftBank can manage multiple mass-scale funding needs as interest rates inch up is keeping its stock at a significant discount to the total net asset value of its holdings.

The company has been selling off assets ahead of such mega-projects and deals, as the fair value of the Vision Fund portfolio rose US$4.8 billion from the prior quarter. All told, the two Vision Funds sold off assets worth a total of US$3.35 billion, including full exits from nine companies. BLOOMBERG