Arm owner SoftBank reports £1.2bn profit as it shifts towards AI
The Japanese tech investor SoftBank made a profit for the second consecutive quarter as it tries to turn its performance around before big planned investments in artificial intelligence.
SoftBank reported net income of 231bn yen (£1.18bn) in the first three months of 2024, compared with a 57.6bn yen loss in the same period last year, according to financial results published on Monday.
The quarterly gain was not enough to offset losses over the rest of its financial year, leaving the Japanese investor with its third annual loss – at 227bn yen – in the 12 months to the end of March.
SoftBank also made big gains on its investments, including in the UK-headquartered chip designer Arm, which investors hope will be the centrepiece of a new AI-focused strategy led by the chief executive, Masayoshi Son.
Gains in the value of Arm do not feed through into SoftBank’s profits, because it is a subsidiary, but the price of shares listed on New York’s Nasdaq stock exchange is up by 60% so far in 2024. Nikkei Asia on Sunday reported that Arm plans to develop AI chips in the hope of launching its first products in 2025.
Son built SoftBank into one of the world’s most prominent investors via bets on internet services, including China’s e-commerce site Alibaba, and also notably as a mobile phone distributor. The outspoken executive used his investment gains to make a series of increasingly bold bets on tech companies, and obtained Saudi Arabia’s backing for its tech-focused SoftBank Vision Funds. During the coronavirus pandemic tech boom the valuations of its companies soared, but after the bubble burst SoftBank has gone through a period of retrenchment, even if Son’s belief in rapid technological advances remains undimmed.
SoftBank last week led a $1bn (£800m) funding round into British autonomous driving tech company Wayve, while Bloomberg has reported that it is in talks to acquire British AI chipmaker Graphcore.
SoftBank had been expected to slip back into a loss for the most recent quarter, but remaining in profit could make it easier for Son to justify further large investments.
However, the Saudi-backed Vision Funds did not perform as well as SoftBank’s other investments during the first three months of the year. They dropped in value by 115bn yen, most notably because of WeWork, the office rental company that filed for Chapter 11 bankruptcy in the US in November and which Son had vocally and expensively backed.