SoftBank, the tech conglomerate based in Tokyo, revealed gains for the second consecutive quarter thanks to an uptick in artificial intelligence investment, which has positively impacted key assets such as Arm Holdings. The net income for the last quarter was 231.1 billion yen (€1.4 billion); a stark contrast against a net loss of 57.6 billion yen during the same period in the previous year. Market predictions had set the net income at 176.3 billion yen. However, the Vision Fund reported a 96.7 billion yen deficit, falling short of the anticipated 185.1 billion yen profit.
SoftBank is on the rebound as its CEO, Masayoshi Son, gears up for substantial investments in AI and semiconductors in an effort to capitalise on Arm’s capabilities beyond mobile technology. Over the past years, the flagship Vision Fund has discreetly sold or written off billions worth of its public holdings. Consequently, this strategic shift has enhanced SoftBank’s cash reserves to 6.2 trillion yen as of the end of March.
Senior analyst at SMBC Nikko Securities, Satoru Kikuchi, highlighted the initial public offering of Arm and an increase in share prices as ‘significant positives’. He communicated the expectation that future investments would be in line with SoftBank Group’s strategic direction rather than diversified ones as with Vision Fund 2.
The resurgence of the dollar against the Japanese yen is also favourable for SoftBank, as most of its assets are valued in the US currency. According to Kirk Boodry of Astris Advisory, a weaker yen enhances the valuation and financial results which gives an additional lift to SoftBank group.
In recent times, SoftBank has ramped up investment in AI hardware and has sometimes taken controlling stakes. It is currently in negotiations to acquire Graphcore, the British semiconductor startup. Earlier this month, SoftBank spearheaded a $1.05 billion funding initiative for Wayve Technologies, a UK-based self-driving start-up, with contributions from Nvidia and existing investor Microsoft. In 2022, SoftBank’s shell corporation merged with Symbotic Inc., a robotics warehouse automation firm, and they have since begun working together on several projects.
SoftBank’s exploration of Arm technology and investment in AI services may be positively viewed by the market, suggested SMBC’s Kikuchi. To bolster its investment finances, SoftBank might consider selling its stakes in T-Mobile, Deutsche Telekom, or Arm. SoftBank has a history of selling interests in assets like Alibaba Group Holding Ltd to gather funds for new ventures, strengthen its financial position, and execute share buybacks.
One aspect that piques interest is SoftBank’s investment philosophy, along with the solidity of their earnings turnaround, remarked Tomoaki Kawasaki from Iwaicosmo Securities. Kawasaki noted that SoftBank, after having a period of financial prudence, shows signs of re-engaging with active investments – Bloomberg.