SoftBank Shares Hit Record High on AI Optimism and Strong Q1 Earnings

SoftBank Group's shares surged by more than 10% to a record high, reflecting strong investor confidence in the company's aggressive focus on artificial intelligence (AI) following a better-than-expected first-quarter profit. The shares reached 14,205 yen in morning trading, with the company's performance helping to push Japan's broader Topix index past the 3,000-point mark for the first time.

The Japanese technology investor reported a net profit of 421.8 billion yen ($2.87 billion) for the April-June quarter, a significant reversal from a loss in the same period a year earlier and well above analyst estimates. This recovery was fueled by the Vision Fund's 451.39 billion yen profit, driven by the improved valuation of its tech holdings, including stakes in Coupang, Symbotic, and Nvidia. The company also reported an improved loan-to-value ratio, which strengthened to 17% at the end of June.

SoftBank's recent series of major AI investments has been a key factor in this rally. The company has committed $30 billion to OpenAI and is leading the funding for Stargate, a $500 billion data center project in the U.S. with partners like OpenAI. The company also booked a $1.42 billion gain on its Nvidia shares. SoftBank's CFO noted the company is prioritizing its AI initiatives.

While the market is optimistic, some analysts have raised concerns. The recent termination of a 500 billion yen share buyback program could limit future upside. Additionally, the company's significant AI ambitions may be challenged by the need for massive funding, particularly if interest rates continue to rise.