RESOLVING THE LEDGER
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See the full story · 1 sourcesSoftBank on Thursday reported profit for its fiscal first quarter that beat market expectations, driven by a huge gain on its stake in Intel , while a rise in ByteDance's value helped its Vision Fund division.
The Japanese giant said net profit for the June quarter totaled 347.3 billion Japanese yen ($2.2 billion). That beat the 120.23 billion expected by analysts, according to LSEG estimates. However, that was a nearly 18% year-on-year decline.
SoftBank saw a 1.3 trillion yen gain on the shares it owns of U.S. chipmaker Intel . SoftBank had announced a roughly $2 billion investment in Intel last year . This helped its investment division, which is separate from the Vision Fund, book segment profit of 1.05 trillion yen. Intel shares have surged nearly 400% over the last 12 months.
The Vision Funds, which house investments spanning OpenAI to TikTok-owner ByteDance, saw a gain of $1.7 billion in value in the first quarter. That was primarily driven by a $2.2 billion increase in the value of SoftBank's stake in Chinese firm ByteDance, which offset declines in companies like PayPay.
SoftBank's Vision Funds segment posted a 5.4 billion yen profit compared to 451.4 billion a year ago. The company said that it saw no gain or loss from its investment in OpenAI.
This is in contrast to the previous quarter, where the company's Vision Funds posted a nearly $20 billion gain , nearly all driven by OpenAI.
SoftBank has committed to invest more than $60 billion in OpenAI, which would give it around 13% ownership of the company, the company said in February. SoftBank said $55 billion of that has already been invested.
However, the company said it did not record any investment gain or loss related to OpenAI.
SoftBank has looked to position itself at the center of the artificial intelligence boom through investments spanning companies like OpenAI and semiconductor companies like Arm .
But investors are heavily scrutinizing AI spending by tech companies and are looking for tangible returns on investments. SoftBank's share price has fallen around 34% from its record high in June as investors grow concerned about how it will continue to fund its bets and the company portfolio's heavy concentration in Arm and OpenAI.
SoftBank posted a 200.8 billion yen loss at its AI computing segment, which was wider than the 32.4 billion yen loss posted in the same quarter last year. This segment includes chip companies that it owns, such as Arm, Graphcore and Ampere. SoftBank said profit deteriorated due to higher research and development costs at the companies.
In June, SoftBank CEO Masayoshi Son told CNBC that he doesn't think the company is overexposed to OpenAI, which makes up around 20% of the Japanese giant's net asset value.
Son also described the AI revolution as being 50 times bigger than the dot-com boom.
"This is the biggest revolution of technology and realization that mankind ever experienced, so this is just like the beginning of the internet," Son added.
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