SoftBank Reports Q1 Profit Exceeding Expectations, Driven by Intel Gain

TOKYO. SoftBank Group reported fiscal first-quarter profit that comfortably beat market expectations, carried by an outsized gain on its stake in Intel while its highest-profile artificial intelligence holding, OpenAI, contributed nothing to the quarter.

Net profit for the June quarter totaled 347.3 billion yen, roughly $2.2 billion. Analysts surveyed by LSEG had expected 120.23 billion yen, meaning the result came in at nearly three times the consensus estimate. The figure was still a decline of almost 18% from the same quarter a year earlier.

The swing factor was Intel. SoftBank booked a 1.3 trillion yen gain, about $8.2 billion, on the shares it holds in the U.S. chipmaker, a position built through a roughly $2 billion investment announced last year. Intel stock has climbed nearly 400% over the past twelve months, turning one of the more skeptically received bets on SoftBank's book into its single largest contributor of the quarter.

That gain sat in SoftBank's investment division, which is accounted for separately from the Vision Fund operation. The division reported segment profit of 1.05 trillion yen.

The Vision Funds told a different story. The vehicles, which hold positions spanning OpenAI to TikTok owner ByteDance, recorded a $1.7 billion increase in investment value for the quarter. Most of that came from a $2.2 billion rise in the value of the ByteDance stake, which offset declines elsewhere in the portfolio, including the Japanese payments company PayPay. Segment profit for the Vision Funds finished at 5.4 billion yen, down sharply from 451.4 billion yen a year earlier.

The most conspicuous line in the quarter was the one that was blank. SoftBank recorded no investment gain or loss related to OpenAI, despite the ChatGPT maker being the centerpiece of its AI strategy and the destination of the largest commitment the group has made in years. A flat quarter on that position leaves the earnings picture resting on a chip holding rather than on the AI platform bet the company has spent the past eighteen months describing to investors.

The result illustrates how quickly SoftBank's reported earnings can turn on the mark-to-market value of a handful of positions. A year-on-year profit decline of 18% and a beat of nearly three times consensus arrived in the same quarter, driven by the same portfolio.

Investors were unmoved by the headline beat. SoftBank shares fell about 4.4% following the report, a reaction that reflects the composition of the profit as much as its size: a one-off revaluation on Intel is not a recurring earnings stream, and the Vision Funds' contribution has thinned considerably from a year ago.

SoftBank's management has continued to push back on suggestions that AI infrastructure spending has run ahead of demand, arguing that supply of compute remains well short of what the market needs. The quarter gives that argument an awkward frame. The company's AI conviction is expressed most heavily through OpenAI, which moved the numbers not at all, while the profit came from a semiconductor turnaround trade and a Chinese social-media holding.

For the coming quarters, the questions facing SoftBank are whether the Intel position holds its value after a rally of that scale, whether OpenAI's valuation begins to register in reported results, and whether the Vision Funds can return to contributing at anything close to their prior level.