SoftBank’s Vision Fund, the flagship tech investment arm of the company, has recorded its biggest gain in nearly three years in the December quarter. This gain comes as a result of the recovery in the valuation of technology companies. The net sales for the quarter were 1.77 trillion Japanese yen ($11.9 billion), slightly lower than the expected 1.8 trillion Japanese yen. However, the net income of 950 billion Japanese yen surpassed the expected 196.5 billion yen.
The Vision Fund saw a gain on investment of 600.7 billion Japanese yen, marking a continued recovery after experiencing record losses in the previous fiscal year. This gain is the highest since the March 2021 quarter when the Vision Fund posted a gain of 3.59 trillion yen. Additionally, this quarter’s net income is SoftBank’s first quarterly profit after four consecutive losses.
The flagship tech investment arm had a challenging time in the previous fiscal year, with a record loss of around $32 billion due to a slump in tech stock prices and the souring of some investments in China. However, the Vision Fund has been able to post gains in the last three quarters, indicating a positive turnaround.
SoftBank also highlighted rising valuations from two major firms that the Vision Fund invests in, Chinese ride-hailing app Didi and TikTok owner ByteDance. These rising valuations contribute to the overall success of the Vision Fund.
In terms of investments, SoftBank saw a boost from the sale of shares of its majority-owned chip designer Arm. This transaction resulted in an investment gain of $5.5 billion for the company. Arm, which went public in the U.S. last year, was acquired by SoftBank in 2016 for around $32 billion. The initial public offering of Arm valued the company at over $50 billion.
SoftBank’s CEO, Masayoshi Son, has been considering various options for chipmaker Arm after Nvidia decided not to acquire the company. Son has repeatedly emphasized Arm’s potential to be a major player in artificial intelligence, a sentiment echoed by the company’s CFO, Yoshimitsu Goto.
SoftBank has undergone a shift in its investment focus, moving from being Alibaba-centric to having an AI-centric portfolio. SoftBank initially grew into one of Japan’s biggest companies thanks to Son’s early bet on Chinese e-commerce giant Alibaba in 2000. However, the company has been reducing its stake in Alibaba, with Goto revealing that Alibaba now accounts for nearly zero percent of SoftBank’s assets, down from 50% at the end of December 2019. On the other hand, Arm’s share in SoftBank’s assets has increased from 9% to 32% during the same period.
Goto also mentioned that SoftBank has reduced its investment exposure to China, indicating a shift away from the country. This change aligns with SoftBank’s strategy to focus more on AI technology and explore new opportunities in the field.
Investors will be closely watching SoftBank’s actions in March when the lock-up period for Arm shares post-IPO expires. Analysts suggest that SoftBank may sell stock in Arm to fuel a buyback of its own shares.
Overall, SoftBank’s Vision Fund has experienced a significant gain in the December quarter, marking a recovery in the valuation of technology companies. The company’s shift towards an AI-centric portfolio and reduced exposure to China reflects its strategic vision for the future. With rising valuations and potential opportunities in the AI sector, SoftBank is poised for continued growth and success in the coming years.
