SoftBank earnings Q2 2024

Japanese giant SoftBank logged a 608.5 billion yen ($3.96 billion) gain on its Vision Fund tech investment arm in its fiscal second quarter ended Sept. 30, lodging a steep quarterly increase after swinging back to black in the three months to June.

The broader Vision Fund segment as a whole, which also factors in non-investment performance such as administrative expenses and gains and losses attributable to third-party investors, reported a gain of 373.1 billion yen. It had declared a loss of 204.3 billion yen in the company’s first fiscal quarter.

The company attributed the lion’s share of the increase to valuation gains recorded at the SoftBank Vision Fund 1, noting higher share prices for e-commerce firm Coupang and Chinese ride-hailing giant Didi Global, as well as the value increase of its investments in Chinese tech company Bytedance.

The Vision Fund has been cashing in on the success of the September 2023 listing of smartphone chip designer Arm Holdings, in which it owns a sweeping majority stake of around 90%.

Masayoshi Son’s tech conglomerate, has seen its share of controversial high-value investments in recent years in companies that have either collapsed or sharply marked down their valuations. It is now repositioning itself at the epicenter of the artificial intelligence boom, where players like Nvidia are reaping in the rewards of meteoric demand for chips and data center GPUs.

An early investor in Yahoo! and Alibaba, Son now calls Nvidia, the $3.57 trillion U.S. titan, “undervalued” and forecasts the advent of AI that is 10,000 times smarter than humans within 10 years — amid late-September media reports that SoftBank will be investing $500 million into key artificial intelligence player OpenAI’s latest funding round.

Tokyo-listed shares of SoftBank are up roughly 51% in the year to date.

The company faces pressure from activist investor Elliott Management, which built a roughly $2 billion stake in SoftBank and pushed for a $15 billion share buyback, CNBC reported in June. The group announced in August that it would repurchase 6.8% of shares available in the company, amounting to 500 billion yen ($3.25 billion).

Japanese companies contended with high fluctuations over the summer quarter, amid a rapid strengthening of the yen and a dramatic sell-off of risk assets in August. Domestic markets have calmed relative to the summer turmoil, as Japan navigates its transition away from its ultra-low-rate policy — but analysts at Barclays note that the country’s economic horizon is not yet stable.

“Crucially, this volatility is likely to continue. Wage growth, particularly in the service sector, is progressing in line with the BOJ’s expectations, leading many to anticipate another interest rate hike in December 2024 or January 2025,” they wrote on Nov. 8.