Key facts
- SoftBank Group's quarterly profit fell 18% to 347.3 billion yen.
- The results surpassed market expectations of around 166 billion yen.
- Gains from Intel stock, which more than tripled in value, boosted results.
- Higher costs and derivatives losses contributed to the profit decline.
- SoftBank's total investment in OpenAI is projected to reach nearly $65 billion by October.
SoftBank Group reported an 18% decrease in quarterly profits, totaling 347.3 billion yen ($2.2 billion) for its fiscal first quarter, a result that surpassed market expectations. The decline was attributed to increased costs and losses from derivatives, which counteracted substantial gains from investments outside its Vision Funds, notably in chipmaker Intel, whose shares more than tripled during the period.
Despite the profit beat, concerns linger about SoftBank's financing strategies for its expanding artificial intelligence ambitions and the rising debt levels associated with AI infrastructure. Founder Masayoshi Son has significantly leveraged the company's balance sheet to invest across the AI spectrum, exposing its portfolio to sector volatility in pursuit of long-term returns.
The performance of OpenAI and its competitor Anthropic, with valuations approaching $1 trillion each, is under scrutiny due to increasing competition from more affordable Chinese AI models. These companies' business models are being challenged, and questions persist about the return on their substantial investments.
SoftBank's total investment in OpenAI is expected to reach nearly $65 billion by October, financed in part by a $40 billion one-year bridge loan and a $20 billion margin loan secured by its stake in Arm Holdings. The company's stock price has mirrored sentiment swings around AI, briefly making it the most valuable company on the Tokyo Stock Exchange in June before retracing gains amid news of potential delays to OpenAI's IPO and AI model-related issues.