Business: Japan’s leading investment company SoftBank Group has made huge profits in the second quarter of this year. The company’s net profit reached 2.5 trillion yen (about $16.6 billion). This is more than double compared to last year. The main reason for this increase is the increase in the value of SoftBank’s stake in OpenAI. OpenAI is the same company that has created AI tools like ChatGPT.
What does the report say?
Analysts had forecast profit of 207 billion yen for the quarter, while SoftBank reported profit of 2.5 trillion yen. The company had made a profit of 1.18 trillion yen in the same quarter last year. SoftBank’s Vision Fund unit alone recorded investment profits of 3.5 trillion yen. Of this, 2.16 trillion yen came from OpenAI-related investments.
Big benefit to Soft Bank due to AI investment
Rapid investment in AI technology and demand for infrastructure like data centers have brought huge benefits to SoftBank. The company’s shares have also reached record highs. However, some investors are worried that this might prove to be an “AI bubble”, meaning that despite huge investments, the returns may not be that great.
Story of investment in OpenAI
In March, SoftBank had invested in OpenAI at a valuation of $300 billion. In October, the company bought $6.6 billion worth of shares from OpenAI employees at a valuation of $500 billion.
Funds raised for investment
SoftBank sold 32.1 million shares of Nvidia to invest in OpenAI, which was worth about $ 5.83 billion. Since April, the company has issued bonds worth a total of 620 billion yen, 2.2 billion dollars and 1.7 billion euros in three different currencies. A bridge loan of $8.5 billion was taken for investment in OpenAI. A bridge loan of $6.5 billion has also been fixed for the acquisition of semiconductor design company Ampere. SoftBank founder Masayoshi Son is known for betting on technological changes. He had made good profits by making initial investments in Chinese company Alibaba. However, his investment in WeWork also proved to be unprofitable.
