Softbank FY loss narrows as tech, AI hype provide limited boost

Investing.com-- SoftBank Group Corp. (TYO:9984) clocked a smaller loss in the year to March 31, as the holdings of the Japanese technology giant saw only a limited boost in valuation from growing hype over artificial intelligence. 

Net income attributable for the fiscal year ended March 31 was 227.65 billion yen ($1.46 billion), compared to a loss of 970.14 billion yen in the prior year.

Loss on investment in Softbank’s flagship Vision Funds was 167.29 billion yen, much lower than the 5.32 trillion yen loss seen in 2023. Softbank’s total loss on investments narrowed to 559.35 billion yen from 835.06 billion yen last year. 

The narrower loss comes as Softbank (OTC:SFTBY) benefited from a bump-up in tech valuations over the past two quarters, especially amid growing hype over AI. The firm also benefited from a weaker Japanese yen, given that most of its investments are offshore.

But this was insufficient in offsetting deep losses in Softbank’s holdings over the past two years, as the tech sector was walloped by rising interest rates and slowing investment. 

2023 was a fairly successful year for Softbank, after it finally listed its British chip designing unit Arm Holdings (NASDAQ:ARM). The chip designer- in whom Softbank holds a 90% stake- doubled in value since its listing, becoming one of the tech conglomerate’s core assets as it benefited from expectations of high demand on AI development. 

But Arm’s major surge in valuation is not reflected in Softbank’s earnings, given that it is a subsidiary of Softbank. Still, Softbank said it clocked an equity gain of 674.4 billion yen from Arm's IPO.

Arm’s shares saw a major correction in April after the firm’s annual outlook underwhelmed Wall Street. A further correction in Arm presents significant risk to Softbank.