SoftBank Group Corp (OTC:SFTBF) (OTC:SFTBY) beat first-quarter profit expectations as a major gain on its Intel Corp. (NASDAQ:INTC) stake offset weaker year-over-year earnings and kept investor focus on Masayoshi Son’s aggressive AI strategy.
Intel Gain Lifts Results
SoftBank reported net profit of 347.3 billion yen, or about $2.2 billion, for the three months ended June, beating analyst expectations of 148.4 billion yen, according to LSEG data, the Financial Times reported. Profit still fell 17.7% from the year-ago period.
The company booked a 1.3 trillion yen, or $8.2 billion, gain on its Intel investment after the chipmaker’s shares surged. SoftBank had agreed to invest $2 billion in Intel last year at $23 per share.
SoftBank also recorded a gain on its stake in ByteDance, TikTok’s parent company. Its Vision Funds posted a 255.8 billion yen investment gain in the quarter, though the company recorded no gain or loss from its OpenAI stake.
AI Bets Drive Outlook
SoftBank’s fortunes remain closely tied to the AI boom through holdings in OpenAI, Arm Holdings plc (NASDAQ:ARM), robotics, data centers and energy businesses. The company’s cumulative OpenAI investment is set to reach $64.6 billion by October for an expected stake of about 13%.
CFO Yoshimitsu Goto said SoftBank remained in a healthy financial position. Goto also said SoftBank’s loan-to-value ratio fell to 13% at the end of June from 17% in March, below the company’s normal ceiling of 25%.
He suggested the level may be too conservative, meaning SoftBank could have room to invest more.
Funding And AI Competition Remain In Focus
SoftBank has arranged large financing facilities to fund its AI ambitions, including a $40 billion bridge loan for OpenAI commitments and margin loans backed by its Arm and SoftBank Corp. holdings.
The company also faces pressure from rising costs in its AI computing segment, which posted a wider loss as research and development spending increased across chip holdings such as Arm, Graphcore and Ampere, CNBC reported.
SoftBank CEO Masayoshi Son has continued to frame AI as a transformative opportunity, saying the AI revolution is far larger than the dot-com boom and still in its early stages.
Earnings Call Highlights
During the conference call, SoftBank Group said first-quarter investment gains surged to 1.8 trillion yen (about $11.36 billion), driven largely by gains in Intel and ByteDance, with Goto calling Intel’s sharp share-price rally a “positive surprise.”
Management also dismissed concerns that AI infrastructure spending is entering bubble territory, arguing that “Supply Is Very Much Short” and demand for AI computing capacity continues to outpace available infrastructure.
The company also reaffirmed its AI strategy, saying it is putting “all of our eggs” in OpenAI rather than investing across competing large language models.
Photo via Shutterstock