SoftBank reports expected small profit despite ongoing challenges

The SoftBank Group, following a drastic sell-off in the global tech market, is decisively steering towards the next big venture. Analysts' expectations for the Tokyo-based company suggest a net profit of 1 billion yen (approximately 6.9 million USD) for the June quarter. This would be a significant improvement compared to a loss of 477.6 billion yen in the previous year but remains modest compared to the profits of the two preceding quarters. These figures highlight how the loss-inducing startups of the Vision Fund continue to weigh on the financials. At a critical phase of its corporate development, the planned release of the quarterly results is imminent. SoftBank's stock price plummeted on Monday to its most significant drop since 1998, driven by investor fears over the time it will take for the much-praised AI investments to pay off. By Tuesday morning, the stocks had recovered much of the loss, but the market capitalization was still about 50 billion USD below the record high reached in July. A prolonged decline in stock prices could impair the company's ability to raise capital, while simultaneously increasing the attractiveness of potential deals. The personal fortune of founder Masayoshi Son has also suffered considerably due to the market turmoil, despite the stock rebounding up to 14% on Tuesday morning in Tokyo. Masayoshi Son is currently planning his next major foray into the future of artificial intelligence. Thanks to a substantial cash reserve from withheld investments in recent years, he now has a solid foundation for new projects. The financial strength of SoftBank has been significantly bolstered by the IPO of Arm Holdings last year and the renewed sale of T-Mobile US shares to Deutsche Telekom. Shares of Arm, the centerpiece of Son's next project, have fallen about 40% from their high in July, following an unchanged forecast and admissions of weaknesses in markets other than data centers and high-end smartphones. Arm is currently striving to break into broader application fields such as the automotive industry. Son, who turns 67 on Sunday, has announced plans to take big risks again. SoftBank plans to invest about 100 billion USD in AI-related chips, as reported by Bloomberg. Last month, SoftBank acquired the British semiconductor startup Graphcore, whose AI-program-designed semiconductors have yet to achieve the anticipated breakthrough, while larger competitors like Nvidia have rapidly gained importance. "We see the entry into the AI chip business as a potential catalyst for SoftBank Group's stock price," wrote Daisaku Masuno, analyst at Nomura Securities, in a note. "It would be positive if the SoftBank Group could realize a wide range of partnerships with major cloud providers.