SoftBank scores another profit to fuel Arm-centred AI shift

TOKYO - SoftBank Group reported a second straight quarter of profitability as the Japanese tech conglomerate benefits from an artificial intelligence (AI) investment boom that has buoyed prized assets like Arm Holdings.

The Tokyo-based company earned a net income of 231.1 billion yen (S$2 billion), compared with a net loss of 57.6 billion yen in the March quarter in 2023. Analysts projected net income of 176.3 billion yen for the period. The Vision Fund reported a loss of 96.7 billion yen, missing estimates for a profit of 185.1 billion yen.

SoftBank is regaining its footing just as founder Masayoshi Son readies sizeable investments in AI and semiconductors, part of a push to

maximise Arm’s potential beyond mobile devices

. The flagship Vision Fund quietly

sold off or wrote down billions of dollars’

worth of its publicly listed holdings in recent years as Mr Son realigns his focus. That has helped lift SoftBank’s cash pile to 6.2 trillion yen at the end of March.

The US dollar’s renewed strength against the Japanese yen also bodes well for SoftBank, whose assets are mostly valued in the US currency. “With 90 per cent of net asset value priced in dollars, a weak yen flatters the valuation and financial results and this has provided some additional support for Softbank Group,” Astris Advisory analyst Kirk Boodry told investors ahead of earnings.

In recent months, SoftBank has stepped up investments in AI-related hardware, taking controlling stakes in some cases. The Japanese investment firm is in talks to acquire British semiconductor start-up Graphcore, Bloomberg reported. Earlier this month, SoftBank

led a US$1.05 billion funding round for UK self-driving tech start-up Wayve

Technologies, investing along with Nvidia and existing backer Microsoft. In 2022, a SoftBank blank-cheque firm merged with robotics warehouse automation firm Symbotic, and the two firms have since partnered on projects.

SoftBank’s attempts to leverage Arm technology and investing in AI services could be well-received by the market, SMBC Nikko Securities senior analyst Satoru Kikuchi said. To increase funds for investment, SoftBank could offload its holdings in T-Mobile, Deutsche Telekom or Arm. In the past, SoftBank has sold off stakes in assets such as Alibaba Group Holding to finance new forays and also shore up its balance sheet and buy back shares. BLOOMBERG