SoftBank Swings to Profit on Nvidia Bet Ahead of Big AI Campaign
The Tokyo-based company reported net income of ¥421.82 billion ($2.9 billion) in its fiscal first quarter, versus the average of analyst estimates compiled by Bloomberg of ¥158.23 billion. The Vision Fund logged a ¥451.39 billion profit.
Son is doubling down on bets geared to help him capitalize on booming investment in AI hardware. As part of that shift in focus, SoftBank has been building stakes in Nvidia and Taiwan Semiconductor Manufacturing Co. among others, while selling off less relevant assets.
SoftBank increased its stake in Nvidia to more than $3 billion as of end-March, helping the Japanese investor benefit from the AI accelerator maker's 46% rally during the three months through June. US President Donald Trump's threat to unleash 100% chip tariffs but exempt companies moving production to America is infusing optimism for SoftBank's $500 billion Stargate data center foray with OpenAI and Oracle. That nudged the Japanese company's stock up around 1.5% on Thursday, putting it on track to pass a record high it hit the day before.
'Our longer-term outlook for SoftBank Group is cautiously optimistic, with a consensus toward continued business expansion,' said Ashwin Binwani, founder of Alpha Binwani Capital. 'We are prepared for volatility and see it as a buy-the-dip opportunity.'
The 67-year-old SoftBank founder seeks to play a more central role in the spread of AI through sweeping partnerships such as Stargate and a planned $30 billion investment in OpenAI. Son is also courting TSMC and others about taking part in a $1 trillion AI manufacturing hub in Arizona.
But concern over whether SoftBank can manage multiple mass-scale funding needs as interest rates inch up is keeping its stock at a significant discount to the total net asset value of its holdings. Some of the conversations behind Stargate have slowed due to market volatility, uncertainty around US trade policy and questions around the financial valuations of AI hardware, Bloomberg News reported in May.
'Key points to consider in assessing SoftBank include whether investment in the Stargate Project involving AI infrastructure in the US will progress; whether additional investment in OpenAI amid a fluid management situation is tenable,' SMBC Nikko Securities analyst Satoru Kikuchi wrote in a note earlier this year.
--With assistance from Aya Wagatsuma.
More stories like this are available on bloomberg.com
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