SoftBank revives portfolio with AI strategy

Japanese multinational investment firm SoftBank reported a revenue of ¥1.18 trillion ($7.7 billion) in the previous quarter, following a loss of about ¥931 billion ($6 billion) from the year before. 

The company made a financial comeback thanks to its Vision Fund investments and founder Masayoshi Son’s shrewdness in taking risks. SoftBank shares have fluctuated with investors’ mixed sentiments on AI’s transformative potential, hitting a record in July before stabilizing.

Founded in 1981, the company started out in telecoms and has pivoted to become an investment company with a portfolio ranging from finance to emerging technologies. In September, it recorded its highest quarterly profit in two years, breaking analysts’ projections of a ¥295 billion quarter revenue. 

SoftBank’s Vision Fund strategy in the AI market

SoftBank’s Vision Fund is the company’s investment strategy, which invests in AI companies valued at over a billion. It has over $100 billion in capital, making it one of the largest technology-focused investment funds in the world. The Vision Fund has exited investments worth almost $2 billion, including Chinese Artificial intelligence company SenseTime.

SoftBank is gearing up for a larger-scale push into the AI market with a new focus on generative AI. It was reported that the company invested about half a billion dollars in OpenAI in a $6.6 billion round, which sent OpenAI’s valuation to $157 billion. It’s also backing Perplexity AI, which is currently valued at $9 billion. 

The company is also invested in the semiconductors market, which has seen significant growth thanks to the boom in the AI sector. It acquired Arm, a UK-based semiconductor company in 2016, with a valuation of about $55 billion following its IPO. 

SoftBank had previously planned to launch AI chips in collaboration with Intel to rival Nvidia. However, it shelved those plans and is currently in talks with TSMC.

Vision Fund profits from Chinese and Indian startup market

Vision Fund’s Chinese and Indian investments contributed to about¥370 billion of the firm’s gains. The Indian market especially played a major role, given the frenzy in the local IPO market, which has sent stock prices up across the board. 

Having struggled to make returns on investments in the past, the fund is now benefiting from public listings of startups like Ola Electric Mobility. Swiggy’s upcoming $1.3 billion IPO also puts the company in a good position.

Analysts estimate that roughly half of the third-quarter gains stem from these Indian IPOs. With the U.S. IPO pipeline poised for a potential reopening, Vision Fund could gain further momentum if demand grows. 

Still, SoftBank’s broader focus remains on AI and semiconductor investments. Founder Masayoshi Son has amassed significant cash reserves, supported by the rising valuation of Arm Holdings, the company’s semiconductor affiliate.