SoftBank shares surge to record after optimism for AI prospects boosted Q1 earnings
SoftBank's share price hit 14,205 yen at the close of morning trading.
SoftBank has announced a series of mammoth investments this year, including committing $30 billion to ChatGPT maker OpenAI, as well as leading the financing for Stargate - a $500 billion data centre project in the United States.
The firm beat analysts' expectations to report a net profit of 421.8 billion yen ($2.87 billion) for the April-June quarter, compared to a loss in the same period a year ago.
Market enthusiasm for AI-related companies also pushed up valuations for its portfolio of listed and unlisted technology companies such that SoftBank's loan to value ratio improved to 17% at the end of June compared to 18% at the end of March.
The results were "evidence of SoftBank's quality diversified portfolio, strong underlying fundamentals, thematic/secular tailwinds for its equity holdings, and the resilience of its balance sheet," Macquarie analyst Paul Golding wrote in a note.
SoftBank was the biggest contributor to gains for Japan's Topix index, which rose some 1.5% to trade above the 3,000 point mark for the first time in its history.
The jump will provide some relief to SoftBank investors as its shares have traded at a more than 50% discount to the value of its assets over the past five quarters.
"Active investors scooped up SoftBank Group shares to beat the Topix's gain," said Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Research Institute.
"When the main indexes rise, they need to buy heavyweights that are rising. SoftBank's strong earnings and the Topix's gains came at the same time."
(Reporting by Anton Bridge and Junko Fujita; Editing by Kate Mayberry)
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