SoftBank posts fourth straight quarterly profit of $1.6 billion on OpenAI gains

By Anton Bridge

TOKYO, Feb 12 (Reuters) – Japan’s SoftBank Group said on Thursday it logged a net profit of 248.6 billion yen ($1.62 billion) in the October-December quarter, boosted by the rising valuation of its investment in OpenAI.

The results, which mark SoftBank’s fourth consecutive quarter in the black, compare to a net loss of 369 billion yen over the same period the previous year.

SoftBank’s earnings have been flattered by the rising valuation of its investment in ChatGPT-maker OpenAI, even as investors question the risk of overexposure to a single firm in the red-hot artificial intelligence sector.

Five analysts surveyed by LSEG projected quarterly net income in a range between a gain of 1.1 trillion yen ($7.07 billion) and a loss of 480 billion yen.

In the nine months to end-December, OpenAI has provided SoftBank with a 2.8 trillion yen investment gain.

Masayoshi Son’s conglomerate has now invested more than $30 billion in the firm, building a shareholding of around 11%, in an “all-in” wager it will emerge as a winner in the battle between competing developers of large language models.

OpenAI is reportedly seeking another capital injection of $100 billion, with SoftBank joined by Amazon and Nvidia as prospective investors at a yet higher valuation of $830 billion.

To fund its bets, the technology investment group has turned to asset sales, bond issuance and loans backed by its other holdings, such as chip designer Arm.

The heavy exposure to OpenAI means SoftBank is increasingly seen as a publicly traded proxy for the U.S. firm, raising investor concerns over the impact on its finances.

The group has already sold its $5.8 billion holding of Nvidia and, between June and December last year, sold part of its stake in T-Mobile for $12.73 billion.

The conglomerate has expanded a margin loan using shares in Arm to $20 billion from $13.5 billion previously, and has used the remaining capacity.

SoftBank has also raised the amount it can borrow against its shares of its domestic telecoms unit SoftBank Corp to 1.2 trillion yen from 800 billion yen.

While OpenAI was once considered the dominant player among makers of large language models, it has recently been negotiating rising costs to train and run its AI models amid intensifying competition from the likes of Alphabet.

SoftBank’s shares closed up 2.4% in a flat market before its earnings were released.

($1 = 153.2500 yen)

(Reporting by Anton Bridge; Writing by Sam Nussey; Editing by Jacqueline Wong)