SoftBank shares hit 6-mth high on Arm windfall, first qtrly profit in 5

Investing.com-- Shares of SoftBank Group Corp. (TYO:9984) rallied on Thursday, tracking a roughly $16 billion windfall from an overnight bounce in subsidiary Arm , while the Japanese investment house also clocked its first profit in five quarters.

SoftBank shares closed 11.1% higher at 7,350.0 yen- their highest level since early-August 2023. They were among the top performers on the Nikkei 225, which surged 2.1%.

SoftBank clocked a net profit of about 985.48 billion yen (6.6 billion) for the three months to December 31, compared to a loss of 744.68 billion yen last year. The profit was aided chiefly by improving technology valuations on the back of a artificial intelligence-fueled buying frenzy.

The profit marked SoftBank's first positive quarter after four straight quarters of losses, representing a potential turnaround for the firm, which was reeling from an extended rout in the technology sector. The firm's flagship Vision Fund, through which it makes a bulk of its tech investments, saw an investment profit of 600.73 billion yen in the quarter.

A positive outlook on AI from the firm's Arm unit also heralded improving prospects for the tech giant.

U.S.-listed shares of British chip designer Arm Holdings (NASDAQ:ARM) jumped as much as 41% in aftermarket trade after the chip designer forecast fourth quarter earnings well above market expectations. The firm said it expects to benefit greatly from an increased push into artificial intelligence development over the coming months. 

Arm expects demand for its smartphone chips- where it holds a dominant market position- to improve as companies begin working on devices that can natively run AI features.

The firm is also a key supplier to NVIDIA Corporation (NASDAQ:NVDA), which is at the heart of an AI-led boom in chip demand. 

Arm generates revenue largely from licensing fees on its chip designs. 

Arm’s overnight bounce saw the firm double in value since its IPO in late-2023. The spike in its shares provides a windfall to SoftBank, with CNBC reporting that the conglomerate saw its stake in the chip designer surge by almost $16 billion. 

SoftBank had purchased Arm for about $32 billion in 2016, and had taken the firm public in 2023 at a valuation of $47 billion. The tech conglomerate still holds a roughly 90% stake in Arm. 

Arm represents the biggest bet so far by SoftBank CEO Masayoshi Son on an AI-led boom in technology valuations. Son had last year flagged an aggressive approach to investing in AI, amid the growing popularity of generative AI tools such as OpenAI’s ChatGPT.