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Masayoshi Son’s SoftBank Group has sold its entire stake in Nvidia for $5.8bn and said net profit more than doubled in its second quarter as the Japanese group prepares for a wave of investments in artificial intelligence.
Net profit at the AI-invested company was ¥2.5tn ($16.2bn) in the quarter to the end of September, far above analysts’ expectations of ¥207bn, according to LSEG data and the ¥1.2tn recorded in the same period last year.
The company said it sold 32mn Nvidia shares last month for $5.8bn, as well as some of its stake in T-Mobile for $9.2bn.
Second-quarter profits were also driven by the group’s tech-heavy Vision Fund, which recorded an investment gain of ¥2.8tn in the quarter from stakes in OpenAI and PayPay.
Son has bet his reputation on a series of huge investments aimed at turning SoftBank into a critical player in AI — a technology he believes will shape “humanity’s future”.
Alongside his ownership of UK chip designer Arm, Son has invested in OpenAI and Oracle. He most recently bought ABB’s robotics arm in a deal valuing the business at $5.4bn.
SoftBank’s shares have more than doubled this year to over ¥22,000, driven by its investment in OpenAI, making Son Japan’s richest man.
The company on Tuesday also announced a four-to-one stock split which will take effect on January 1, saying it said would make the shares “more accessible to investors and further expand its investor base”.
Oliver Matthew, an analyst at CLSA, said SoftBank’s shares still traded at a discount of close to 25 per cent compared with the value of its holdings if OpenAI were to be valued at $1tn. He has a target share price of ¥29,000.
Last month the ChatGPT maker completed a long-awaited restructuring, unlocking a second tranche of investment from SoftBank and the possibility of an eventual public listing.
Other analysts, however, warned SoftBank’s valuation might be too high.
David Gibson at MST Financial downgraded the stock on concerns that demand for OpenAI’s ChatGPT might have peaked and around SoftBank’s funding commitments.
The company can fund the $28bn needed for investments, including OpenAI, this year, but the longer-term picture is less clear, Gibson told clients.
“Longer term I estimate [SoftBank Group] has committed $113bn of investments, but only has funding ability of $58.5bn and hence it has overcommitted,” he wrote, adding that the company might need to tap money from its Vision Fund or “sell down its stakes” in its telecoms provider SoftBank Corporation or Arm to fund its plans.
The “market has ignored this unfunded risk which is ripe for execution problems”, Gibson wrote. “Recent debt issuance at interest rates over 8 per cent suggest the debt market realizes this while I think the equity market has not.”
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