SoftBank Makes $7.7 Billion in Profits as It Prepares New Artificial Intelligence Bets

• SoftBank reported quarterly profit of $7.7 billion on Tuesday, following a loss last year.
• The gains in tech bets come as it prepares to invest more in artificial intelligence and looks to future IPOs.
• SoftBank Vision Fund’s CFO told BI that “macro headwinds” are helping the public portfolio.

SoftBank’s Bets on artificial intelligence and timely public listings helped it post its biggest profit in two years, a year after posting billions of dollars in losses.

The Japanese tech group made a profit of 1.18 trillion yen ($7.7 billion) on Tuesday. In the same period last year, it announced a loss of 931.1 billion yen ($6 billion).

Masayoshi Son’s company – once associated with his infamous company Failed bet on WeWork and other loss-making startups highlighted gains in Vision Funds, huge investment vehicles for both public and private holdings in technology companies.

Earnings from Vision Fund 1, a $98.6 billion investment vehicle launched in 2016 with the backing of Abu Dhabi and Saudi Arabia’s sovereign wealth funds, reached $3 billion in the second quarter. It has reported strong performances in publicly traded companies in its portfolio, such as Didi Chuxing, the Chinese version of Uber.

Navneet Govil, chief financial officer SoftBank’s Vision FundsHe told Business Insider that “macro headwinds” such as interest rate cuts in the US and stimulus measures in China have helped the public portfolio.

Vision Fund 2, which invested $500 million in OpenAI last month, saw investment gains of $900 million in the quarter, driven by growth in private portfolio companies like Revolut.

The UK-based fintech giant, which has gained banking licenses in the UK and Mexico in recent months, is currently valued at $45 billion. SoftBank invested $33 billion in Revolt in 2021.

Tailwinds for IPO activity

Listings of companies such as Ola Electric in India also gave SoftBank a boost.

Govil said SoftBank sees opportunities for future gains from IPOs after a period of recession, adding that “rate cuts in the US and elsewhere are constructive developments because they effectively lower the cost of capital and provide a good tailwind for IPO activity.”

He continued: “We have a late-stage portfolio currently valued at around $34 billion and some truly high-quality companies that are leaders in their respected industries, from ByteDance to PayPay to Fanatics. They will all be listed when the time comes.”

Despite its investment gains, Vision Fund 2 has lost a total of $21 billion since its inception. The fund has had to grapple with a more challenging interest rate environment and a slow interest rate environment in recent years. IPO market.

The results come as SoftBank goes on a massive investment spree in artificial intelligence to realize Son’s ambitious vision. At SoftBank World (annual customer event) last month, the founder and CEO said: He hoped to achieve “artificial superintelligence” in ten years.

Son, 67, who made his original fortune with a timely bet on Alibaba, hopes to generate big returns in the era of prolific artificial intelligence. It has already placed bets on popular companies like Perplexity and chip firms trying to rival Nvidia, like Graphcore and Arm.