Key Takeaways
SoftBank Group’s Vision Fund recorded a $46 billion gain for the fiscal year, driven almost entirely by the soaring valuation of its large stake in artificial intelligence leader OpenAI.
"While the upside potential has narrowed due to recent gains, the catalyst for future price increases will be progress in the company's own initiatives," Nomura analyst Daisaku Masuno said in a note, raising SoftBank's share price target to 7,500 yen.
The blockbuster return highlights the success of founder Masayoshi Son's aggressive pivot to AI, but also raises questions about the debt-fueled strategy used to fund it. Analysts had expected the group to report a net profit of around 236 billion yen ($1.50 billion) for the January-March quarter. SoftBank's 11% stake in OpenAI was estimated to be worth $80 billion at the end of March, a significant increase from $54.4 billion three months prior, according to TD Cowen estimates.
The gains have sent SoftBank's stock soaring, with shares nearly doubling since the beginning of April. However, the heavy borrowing required to finance its AI ambitions is drawing scrutiny. S&P Global Ratings revised SoftBank's credit outlook to negative after OpenAI's latest funding round, citing a potential deterioration in the quality of its portfolio and its financial capacity. These concerns were amplified after a media report indicated the company had to downsize a proposed margin loan that was to be backed by its OpenAI stake.
SoftBank's capital commitments for 2026 are substantial. Beyond a planned $30 billion follow-on investment in OpenAI, the company must also fund an estimated $25 billion in other strategic projects. This includes $16 billion for the Stargate data center developments in partnership with OpenAI and Oracle, and a combined $9 billion for the acquisitions of ABB Robotics and DigitalBridge.
The Japanese investment giant has continued to pour capital into AI-related hardware. This week, filings revealed a $457 million injection into Graphcore, a U.K.-based AI chip developer SoftBank acquired in 2024. A person familiar with the matter told CNBC the funds were a "portion" of the money Graphcore is expecting from SoftBank this year.
The significant financing needs have led investors to seek clarity on SoftBank's funding strategy. The performance of its other major holdings, including British chip designer Arm, will be critical. The upcoming earnings call will be closely watched for details on how the company plans to balance its ambitious investment pipeline with maintaining a stable financial position.
This article is for informational purposes only and does not constitute investment advice.
