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Investago | SoftBank Bounces Back: Tech & AI's Promise
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SoftBank Bounces Back: Tech & AI's Promise

Japan's SoftBank Group is anticipated to announce a return to profitability in its upcoming first-quarter earnings, riding on the resurgence of its Vision Fund investing arm's tech stock portfolio.[1]

This potential comeback follows two years of losses for SoftBank, attributed to the diminished value of the Vision Fund portfolio. To improve its financials, the group previously liquidated a significant stake in Alibaba Group Holding. This upswing could alleviate the pressures on CEO Masayoshi Son, who, despite pioneering innovative tech investments, has faced challenges with some underperforming ventures. A significant interest lies in the prospective listing of chip designer Arm. If successful, this move will not only further strengthen SoftBank's finances but also reaffirm Son's reputation as a visionary tech investor. "Considering Arm's seminal role in semiconductors, this is monumental for both the company and the broader tech landscape," remarked Rolf Bulk from New Street Research. The predicted net profit for SoftBank stands at 75 billion yen ($525 million) for the April-June quarter. Nevertheless, the Vision Fund has seen five quarters of losses due to backing companies that lost market favor. However, with tech valuations on the rise, there's optimism for a parallel surge in private valuations. The quarter witnessed gains for companies like DoorDash and Grab Holdings. Son's recent declaration of transitioning to an "offense mode", spurred by AI developments, hints at future deals. Concurrently, SoftBank's ventures include automating warehouses and investing in tech insurance company Tractable. The prospect of Arm expanding in data centers and the automotive sector, coupled with the AI-driven growth in Nvidia's market cap, has analysts foreseeing significant growth for the firm.[2]

 

[1,2] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.

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Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81.75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.