"AI Faith" Ignites Bullish Craze! SoftBank Stock Price Soars 13% to Historic High

After successfully turning a quarterly loss into profit, legendary investor Masayoshi Son's SoftBank Group Corp.'s stock price surged to a historic high in the Japanese stock market. This also signifies the market's recognition of Son's successful bets on leading AI companies such as NVIDIA Corporation (NVDA.US), Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US), and ARM Holdings, in which SoftBank is the largest shareholder, bringing in strong investment returns. It is believed that these investments in AI, which are expected to dominate the global stock market, will bring long-term investment returns for SoftBank. The recovery of SoftBank's iconic Vision Fund investment value, as well as the sale of assets such as T-Mobile US Inc., which yielded substantial profits, are allowing Son to double down on his "AI ambitions". This will enable him to fully capitalize on the significant opportunities presented by global enterprises' flourishing investments in AI infrastructure hardware. In June, SoftBank sold its long-term stake in the U.S. telecom company for $4.8 billion and recently disclosed the sale of $3 billion worth of shares of the same operator. The bets on AI turning losses to profits have propelled the investment giant headquartered in Tokyo to see its stock price surge by as much as 13% in the Japanese stock market, marking the largest increase in four months and putting it on track to hit a new closing high on Friday. In the U.S. stock market, SoftBank's ADR (SFTBY.US) rose over 5% on Thursday and is currently just steps away from its historic high set in 2021. However, SoftBank's 500 billion yen (about $3.4 billion) stock buyback program has been terminated, with the company eventually repurchasing only around 330 billion yen worth of its own stock. Driven by the optimistic sentiment towards artificial intelligence in the market, SoftBank's stock price reached a new high In a report to investors from SMBC Nikko Securities analyst Satoru Kikuchi, he stated that gains from exchange rates also contributed to SoftBank's profits. He mentioned that while the positive sentiment from betting on AI may continue to support SoftBank's stock price hitting historic highs, the company's announcement of asset sales to fund its larger-scale AI bets and the end of the buyback program "might limit future upside potential." Regulatory filings show that by the end of March, SoftBank increased its stake in NVIDIA Corporation to about $3 billion (more than twice the $1 billion increase from the previous quarter), while also purchasing $330 million worth of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR stock and $170 million of Oracle Corporation stock. It is undeniable that Masayoshi Son, who gained fame for his early bet on Alibaba Group Holding Limited Sponsored ADR, successfully bet on these leading AI companies, bringing huge investment returns to SoftBank. Combined with the long-term investment returns from SoftBank's position as the largest shareholder in ARM, investors are increasingly confident in the investment returns SoftBank will generate in AI, thus flocking to SoftBank's stock. NVIDIA Corporation, undoubtedly the "AI chip leader", the first company in the world to surpass a market value of $4 trillion, is currently on a rising trajectory of repeated highs in a "bull market". Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, holding the global AI computing capacity, with the skyrocketing demand for AI GPUs and AI ASICs, cannot do without Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, riding on the AI trend to break through the trillion-dollar mark. The bullish logic behind SoftBank's bets on Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR and ARM is similar: due to the continuing explosive demand for NVIDIA Corporation's Blackwell architecture AI GPUs by global enterprises and government organizations this year, as well as the incredibly strong demand for AI ASICs revealed by Broadcom Inc. and Marvell's recent financial reports. NVIDIA Corporation's self-developed Grace CPU is based on the ARM architecture, and the global data center acceleration deployment of self-developed ARM architecture server CPUs is driving ARM's market value towards $200 billion. The stock prices of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's U.S. ADRs and Taiwan stocks have been on a strong rebound since April, with the stock's innovative high trend appearing far from over. With the continued explosive growth in global demand for AI computing power, coupled with the increasingly large-scale AI infrastructure investment projects led by the U.S. government and the relentless investment from tech giants in building large data centers, the "AI faith" sweeping the globe for long-standing investors in NVIDIA Corporation and the AI computing industry still holds a "super catalytic" effect on the stock prices of the computing leaders. They are betting that the prices of companies in the AI computing industry chain led by Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR and NVIDIA Corporation will continue to echo the "bull market curve". According to Wall Street investment giants Loop Capital and Wedbush, the global AI infrastructure investment wave centered around AI computing hardware is far from over and is only at the beginning. With the unprecedented "AI computing power demand storm" driving, this round of AI investment wave is expected to reach a scale of up to $2 trillion. The Wedbush analyst team emphasized in a research report, "We have always maintained an extremely optimistic view, believing that investors still underestimate the super growth wave brought by the $2 trillion that global enterprises and governments will invest in AI infrastructure and applications in the next three years." SoftBank's profits far exceeded expectations, empowering Masayoshi Son's AI ambitions In terms of financial reports, the Tokyo-based company recorded a net profit of 421.82 billion yen (approximately $29 billion) in its first fiscal quarter, more than double the average analyst's expectations. The Vision Fund recorded a profit of 451.39 billion yen, benefiting from the rebound in tech valuations and the strong returns brought by its holdings in Coupang Inc., Auto1 Group SE, Symbotic Inc., and Swiggy Ltd. SoftBank's investment returns were further boosted by unrealized gains from its recent purchases of NVIDIA Corporation and Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR stocks. As of the end of March, the Japanese investment giant increased its stake in NVIDIA Corporation to over $3 billion, helping the Japanese investor benefit from the AI chip leader's 46% increase in the three-month period leading up to June. At 67 years old, SoftBank's founder Masayoshi Son hopes to play a more central role in the global adoption of AI. The core of this advancement is his leadership in ARM, a chip design leader, as well as the massive $500 billion "Stargate" ultra-large-scale data center project being conducted in the U.S. with OpenAI, Oracle Corporation, and Abu Dhabi's Technology Investment Fund, MGX. SoftBank CFO Yoshimitsu Goto stated that the progress of the "Stargate" initiative has been delayed, admitting for the first time that the $500 billion artificial intelligence plan with OpenAI is behind schedule. He mentioned that SoftBank will soon enter into specific negotiations for its first "Stargate" project. He also stated that the Tokyo-based investment institution has not participated in OpenAI's data center project in Norway, while projects in the UAE and Abilene, Texas are being led by OpenAI. During the earnings conference, Goto stated, "Things are taking more time than originally expected, but we hope to accelerate the progress from now. We are currently focusing all of our businesses on AI infrastructure and are committed to expanding investment returns in multiple aspects." A $1 trillion AI manufacturing center As part of its multi-pronged approach to entering the AI field, SoftBank plans to invest up to $30 billion in OpenAI and has signed a $6.5 billion agreement to acquire the renowned chip designer Ampere Computing Holdings. Son has also been lobbying chip industry leaders like Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR to participate in building a historic $1 trillion AI manufacturing center in Arizona. Before the financial results were announced, SoftBank's stock price had already reached a new all-time high. U.S. President Donald Trump threatened to impose a 100% tariff on chips but exempted companies that would shift production to the U.S., injecting optimism into the "Stargate" project. Ashwin Binwani, founder of Alpha Binwani Capital, stated, "We hold a cautiously optimistic view on the long-term fundamental prospects of SoftBank Group, and market consensus leans towards its diversified investment business continuing to expand." However, concerns in the market about SoftBank's ability to handle multiple large-scale financing demands as Japanese interest rates may gradually rise have caused its stock price to trade at a significant discount relative to the net asset value of its holdings. Prior to embarking on these mega projects and transactions, the company has been heavily selling off assets, while the fair value of the Vision Fund portfolio increased by $4.8 billion from the previous quarter. Overall, the two Vision Funds collectively sold a total of $3.35 billion worth of assets, including complete exits from nine companies. "As of June, SoftBank Group has disclosed a loan-to-value (LTV) of 17%. However, with ARM's subsequent 16% drop in stock price and the company's commitment to further invest $10 billion or more in OpenAI, this ratio may weaken - potentially even surpassing its target figure of 25%. The company has only invested around $650 million in the 'Stargate' project to date and expects to complete the $6.5 billion acquisition of Ampere Computing by March next year, subject to regulatory approval. Selling stakes - most likely in telecom companies, may still be a key tool in managing LTV." Bloomberg Intelligence credit analyst Sharon Chen said. However, if OpenAI fails to reorganize into a for-profit entity by the end of the year, SoftBank's total investment in OpenAI may be reduced. Reports also indicate that the approval of the Ampere transaction still requires the consent of U.S. antitrust regulators and the Committee on Foreign Investment in the United States. Bloomberg reported that the acquisition process is facing a potentially lengthy review.