SoftBank's bets on AI and timely public listings have helped it post its biggest profits for two years, a year after posting losses in the billions.
The Japanese technology conglomerate swung to a 1.18 trillion yen, or $7.7 billion, profit on Tuesday. For the same period last year, it reported a 931.1 billion yen loss.
Masayoshi Son's company — once associated with its notorious failed bet on WeWork and other loss-making startups — pointed to gains made across its Vision Funds, its huge investment vehicles with both public and private holdings in tech companies.
Gains for its Vision Fund 1, a $98.6 billion investment vehicle launched in 2016 with backing from the sovereign wealth funds of Saudi Arabia and Abu Dhabi, United Arab Emirates, totaled $3 billion in the second quarter. It reported strong performances in listed companies in its portfolio, such as DiDi Chuxing, a Chinese version of Uber.
Navneet Govil, the chief financial officer at SoftBank's Vision Funds, told Business Insider that "macro tailwinds" such as US interest-rate cuts and stimulus measures in China helped its public portfolio.
Vision Fund 2, which made a $500 million investment in OpenAI last month, made a $900 million investment gain in the quarter due to growth in privately held portfolio companies such as Revolut.
Revolut, a UK fintech giant that has won banking licenses in the UK and Mexico in recent months, is now valued at $45 billion. SoftBank invested in the neobank in 2021, when it was worth $33 billion.
Tailwinds for IPO activity
Listings in India of companies like Ola Electric have also provided a boost for SoftBank.
Govil said SoftBank saw opportunities to realize gains from initial public offerings after a period of stagnancy, adding: "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 also said: "We have a late-stage portfolio that's now valued at about $34 billion and some really high-quality companies which are leaders in their respected industries, from ByteDance to PayPay to Fanatics. They will all list when the time is right."
Despite the investment gain, Vision Fund 2 has lost an overall total of $21 billion since its inception. The fund has grappled with a tougher interest-rate environment in recent years and a slow IPO market.
The results come as SoftBank gears up for a huge investment spree in artificial intelligence to realize Son's ambitious vision. Last month at SoftBank World — its annual customer event — the founder and CEO said he hoped to achieve "artificial superintelligence" within a decade.
Son, who's 67 and made his original fortune with a timely bet on Alibaba, is hoping to create outsize returns in the generative-AI era. He has already bet on buzzy companies such as Perplexity and chip firms trying to rival Nvidia, such as Graphcore and Arm.
