SoftBank Group reported Thursday a much higher-than-expected profit for its fiscal first quarter, driven by the strong recovery in Vision Fund.
The Japanese conglomerate of investment posted a quarterly profit exceeding the LSEG consensus estimate of Y=127.6 Billion.
SoftBank has now posted its second successive quarterly profit. This is a significant improvement from the loss of Y=174.28 Billion reported during the same time period in 2017.
Vision Fund is leading the turnaround
SoftBank’s Vision Fund, the tech investment arm, led the improvement, recording a profit of Y=451.4bn in the first three months, after a previous loss.
Vision Fund’s assets increased by $4.8bn during the third quarter. This was boosted by increases in publicly traded companies like Singaporean ride-hailing company Grab and Indian food-delivery platform Swiggy.
SoftBank also noted positive results from its private investments in Indian portfolio companies.
Investors will likely welcome the Vision Fund’s recovery as an indication that SoftBank is starting to see results from its aggressive investments in emerging technology and artificial intelligence.
SoftBank’s results were affected by losses across the portfolio, despite the Vision Fund’s positive performance.
In the second quarter of this year, the company suffered a loss on investments of Y=256.55bn from the sale of T-Mobile shares and Alibaba.
SoftBank announced that in August it had sold approximately $3 billion worth of shares to T-Mobile.
Gains from Nvidia holdings partially offset these losses.
SoftBank’s chip design company Arm posted an 8.66 billion Y loss for the third quarter.
SoftBank attributes this to the sharp rise in R&D expenses, which outpaced revenue growth.
Softbank AI Bet
SoftBank continues to invest in AI.
It is currently leading a funding round of $40 billion for OpenAI, which is the creator of ChatGPT. The proposed acquisition of Ampere Computing, a maker of AI chips, is also waiting on regulatory approval.
SoftBank is repositioning itself to achieve long-term success through these moves.
SoftBank is a major player in Stargate, a $500 billion project in America that aims to create advanced AI infrastructure and data centers.
SoftBank has returned to profitability in its fiscal year ending March. This is the first time it’s been profitable for four years.
This rebound was helped by legacy investments such as T-Mobile and Deutsche Telekom.
Investors will continue to focus on SoftBank’s high-risk investments and ability to fund projects of this scale, such as Stargate.
SoftBank reports strong quarterly profits of around $2.9B Vision Fund gains. This article may change as new information becomes available.
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