SoftBank reports big quarterly profit as its OpenAI stake rises

In short: SoftBank reported a much larger-than-expected quarterly profit, mainly because the value of its stake in OpenAI has gone up.

What happened

SoftBank, a large Japanese technology investor, said it earned net income of ¥1.8tn, about $11.6bn, in the three months ending in March. Analysts had expected about ¥235.7bn, based on LSEG data.

The company said the results were lifted by the rising value of its holding in OpenAI, the maker of ChatGPT. SoftBank’s Vision Funds, which are its main investment vehicles (like big baskets that hold many startup and tech investments), hold about a 13% stake in OpenAI.

Over SoftBank’s full financial year, it said it recorded a cumulative gain of $45bn on its OpenAI stake. SoftBank is also in the middle of a $30bn investment into OpenAI, and it expects its total cumulative investment to reach $64.6bn once the final payment is settled in October.

SoftBank said its Vision Funds made gains on investments of ¥3.1tn in the fourth quarter. Its share price has been climbing back toward last year’s peak as more investors have been buying technology stocks.

SoftBank’s shares had previously fallen sharply, partly because investors worried about its exposure to OpenAI and the debt SoftBank took on to support that bet. The company also pointed to support from Arm, the UK chip designer in which SoftBank owns about 90%.

Why it matters

SoftBank is a bellwether for big tech investing, meaning its results can signal how confident investors feel about AI companies. When SoftBank reports large paper gains on OpenAI, it can influence market mood and help determine how easily other AI firms can raise money.

Source: Financial Times