SoftBank's precise bet on NVIDIA and Taiwan Semiconductor: Q1 net profit far exceeds expectations at $2.9 billion, further preparing ammunition for AI investments

According to Zhitong Finance APP, SoftBank achieved better-than-expected profits in the first fiscal quarter, thanks to gains from its investments in NVIDIA (NVDA.US) and other startups. The company reported a net profit of 421.82 billion yen (approximately 2.9 billion USD) for the first fiscal quarter ending June 30, more than double the average analyst expectation. Its flagship Vision Fund generated a profit of 451.39 billion yen, becoming the largest driver of earnings, benefiting from the rebound in technology sector valuations and investment returns from companies such as Coupang, Auto1, Symbotic, and Swiggy.

Notably, SoftBank's stake in NVIDIA had increased to over 3 billion USD by the end of March. The financial report indicated that NVIDIA's stock price surged 46% during the quarter, allowing SoftBank to enjoy the AI boom. SoftBank also benefited from its holdings in Taiwan Semiconductor (TSM.US) while continuing to sell off some less relevant assets.

These investments support founder Masayoshi Son's bet on artificial intelligence technology. The recovery of SoftBank's struggling Vision Fund is helping Masayoshi Son ramp up investments to seize burgeoning opportunities in the AI hardware sector.

U.S. President Trump threatened to impose tariffs on 100% of chips but exempted companies that shift production to the U.S., injecting optimism into SoftBank's joint investment of 500 billion USD with OpenAI and Oracle in the "Stargate" data center project. This has driven the Japanese company's stock price to new highs.

Masayoshi Son aims to play a more central role in the promotion of artificial intelligence through a series of broad collaborations, such as the "Stargate" project and plans to invest 30 billion USD in OpenAI. He is also in talks with Taiwan Semiconductor and other companies, hoping they will participate in establishing a 1 trillion USD AI manufacturing center in Arizona.

Ashwin Binwani, founder of Alpha Binwani Capital, stated, "We are cautiously optimistic about SoftBank's long-term prospects, and there is a general belief that its business will continue to expand. We are prepared for volatility and view it as a 'buying opportunity.'"

However, as interest rates gradually rise, concerns are growing about SoftBank's ability to meet large-scale funding demands. As a result, its stock price remains significantly discounted relative to its total net asset value. According to media reports in May, due to market volatility, uncertainty in U.S. trade policies, and skepticism about the financial valuations of AI hardware, progress on some transactions behind "Stargate" has slowed.

The company stated that SoftBank's plan to acquire chip design company Ampere Computing Holdings for 6.5 billion USD still requires approval from U.S. antitrust regulators and the Committee on Foreign Investment in the United States. Reports indicate that the deal may face a lengthy review process In order to prepare sufficient "ammunition" for AI investments, SoftBank has been divesting non-core assets. Following the sale of its long-term holdings in Alibaba and Deutsche Telekom, in June this year, it raised approximately $4.8 billion by selling shares of T-Mobile US (TMUS.US), and in August, it sold an additional $3 billion worth of T-Mobile shares.

Satoru Kikuchi, an analyst at Sumitomo Mitsui Trust Securities, wrote in a report earlier this year: "Key points to consider when evaluating SoftBank include whether the 'Stargate Project' in the United States (involving investments in AI infrastructure) will continue to advance; and whether further investments in open AI companies are feasible under unstable management conditions."