SoftBank's Profit Soars on AI Investments

Japanese technology conglomerate SoftBank Group Corp. has dramatically reversed its fortunes, reporting a substantial profit in the April-June quarter, largely propelled by its strategic investments in the burgeoning artificial intelligence sector.

The Tokyo-based giant announced a profit of 421.8 billion yen ($2.9 billion) for the quarter, a significant turnaround from the 174 billion yen loss recorded in the same period last year. Quarterly sales also saw a healthy 7% increase, reaching 1.8 trillion yen ($12 billion). This rebound underscores the long-held conviction of SoftBank founder Masayoshi Son, who has consistently championed artificial intelligence as the defining technology of the future.

SoftBank, known for its audacious investment strategy through its Vision Funds, has made substantial bets on leading AI innovators. Its portfolio includes stakes in chipmaking powerhouse Nvidia and generative AI pioneer OpenAI, both of which have seen their valuations soar amidst the global enthusiasm for artificial intelligence. Additionally, investments in Arm Holdings and Taiwan Semiconductor Manufacturing Co. (TSMC), crucial suppliers of the advanced chips powering AI development, have further benefited from the sector’s rapid growth.

The company’s financial performance, often a direct reflection of its high-risk, high-reward investment approach, appears to be stabilizing, at least for now. As SoftBank senior executive Yoshimitsu Goto affirmed to reporters, “The era is definitely AI, and we are focused on AI. An investment company goes through its ups and downs, but we are recently seeing steady growth.”

Beyond AI-centric companies, SoftBank’s diverse investment portfolio has also yielded notable successes. For instance, Coupang, often dubbed the “Amazon of South Korea” for its dominant e-commerce presence, has expanded its operations beyond Seoul into the U.S. and other Asian markets, contributing positively to SoftBank’s results.

Looking ahead, SoftBank is preparing for the initial public offering (IPO) of PayPay, its popular cashless payment system, with preparations reportedly progressing well. The group has also recently overseen successful IPOs for Chime, a U.S. “neobank” providing accessible banking services, and eToro, a prominent personal investment platform, further diversifying its revenue streams and offering liquidity events for its holdings.

Reflecting investor confidence in its renewed trajectory, SoftBank Group stock closed 1.3% higher on the Tokyo Stock Exchange following the earnings announcement, building on gains made over the past year.