SoftBank Shares Soar to Record High on AI Optimism

SoftBank Group’s shares soared to unprecedented levels on Friday, marking a powerful vote of confidence from investors in the company’s aggressive push into artificial intelligence. The stock surged over 13% during the day, closing the morning session at 14,205 yen before settling at 13,865 yen, still up an impressive 10.39% by the close. This rally followed the company’s first-quarter earnings, which significantly outperformed market expectations.

Strategic Bets on the AI Frontier

The Japanese technology giant has been on an investment spree, positioning itself at the forefront of the AI revolution. Among its most high-profile moves this year is a staggering $30 billion commitment to OpenAI, the creator of ChatGPT, along with a leadership role in financing Stargate, a monumental $500 billion data centre initiative in the United States. These ventures underscore SoftBank’s ambition to dominate the next wave of technological infrastructure.

Earnings Deliver a Turnaround Story

SoftBank’s April - June results reflected a sharp turnaround in performance. The group posted a net profit of 421.8 billion yen ($2.87 billion), a dramatic improvement from the loss recorded during the same quarter last year. The market’s appetite for AI-related investments also boosted the valuations of both listed and unlisted companies within SoftBank’s portfolio, helping improve its loan-to-value ratio to 17% at the end of June, compared to 18% just three months earlier.

Portfolio Strength and Balance Sheet Resilience

The latest results reaffirm the strength of SoftBank’s diversified portfolio, underpinned by robust fundamentals and supported by long-term secular trends in technology. The company’s equity holdings continue to benefit from thematic tailwinds, while its balance sheet shows resilience in a volatile market environment.

Driving Broader Market Gains

SoftBank’s performance also had a significant impact on the broader Japanese equity market. It emerged as the single largest contributor to the Topix index’s advance, propelling the benchmark to trade above the 3,000-point level for the first time in history. The Topix ultimately closed 1.21% higher at 3,024, with SoftBank leading the charge.

Investor Sentiment and Market Dynamics

The surge in SoftBank’s share price offered some relief to long-term investors, as the stock had been trading at a discount of over 50% to its net asset value for five consecutive quarters. Active market participants rushed to accumulate the shares, capitalising on the company’s strong earnings momentum and the concurrent rise in the Topix. For many, the combination of heavyweight status and robust results made SoftBank an essential buy in a rising market.