SoftBank scores another profit to fuel Arm-centered AI shift

SoftBank Group Corp. has achieved another profitable quarter, thanks to its investments in artificial intelligence (AI) that have boosted assets like Arm Holdings Plc. The Japanese tech conglomerate reported a net income of ¥231.1 billion ($1.5 billion), compared to a net loss of ¥57.6 billion in the same quarter last year. This exceeded analysts’ projections of ¥176.3 billion. However, SoftBank’s Vision Fund reported a loss of ¥96.7 billion, missing expectations for a profit of ¥185.1 billion. With a cash pile of ¥6.2 trillion as of March, SoftBank is preparing to invest heavily in AI and semiconductors to maximize Arm’s potential beyond mobile devices. The company’s focus is on strategic investments directed by SoftBank Group rather than diversified investments like Vision Fund 2. SoftBank’s assets being mostly valued in dollars, the renewed strength of the US currency against the Japanese yen is also beneficial for the company.
SoftBank has been making significant investments in AI-related hardware recently, and it seems they are not slowing down. According to Bloomberg, the Japanese investment firm is currently in talks to acquire Graphcore Ltd., a British semiconductor startup. This comes after SoftBank led a $1.05 billion funding round for UK self-driving startup Wayve Technologies Ltd., joining forces with Nvidia and Microsoft Corp. in the investment. In addition, SoftBank merged with robotics warehouse automation firm Symbotic Inc. through a blank-check firm in 2022, and the two companies have since collaborated on various projects.

SoftBank’s focus on leveraging Arm technology and investing in AI services has the potential to be well-received by the market, as stated by SMBC’s Kikuchi. To increase funds for their investments, SoftBank may consider selling their holdings in T-Mobile, Deutsche Telekom, or Arm. In the past, SoftBank has sold stakes in assets like Alibaba Group Holding Ltd. to finance new ventures, strengthen their balance sheet, and repurchase shares.

Tomoaki Kawasaki, a senior analyst at Iwaicosmo Securities, is interested in SoftBank’s investment strategy and their prospects for earning recovery. After a period of holding back on investments, SoftBank has been hinting at becoming more active in this space again.