SoftBank’s Vision Fund is expected to turn profitable again after five quarters of losses, thanks to a resurgence fueled by artificial intelligence (AI) and the resulting increase in startup valuations. After suffering losses of ¥6.9 trillion ($48 billion) over the past two fiscal years, SoftBank is looking to bounce back with a modest profit at the Vision Fund for the quarter ending in June. Analysts estimate that SoftBank as a whole will report a profit of around ¥73 billion.
The success of SoftBank’s future deals depends largely on the initial public offering (IPO) of Arm Ltd., a chip designer owned by SoftBank. Arm is aiming to raise up to $10 billion in an IPO scheduled for September, valuing the company between $60 billion and $70 billion. If successful, Arm’s IPO would be one of the largest tech debuts on record, surpassing even Alibaba Group Holding Ltd. and Meta Platforms Inc.
The AI frenzy has significantly boosted the valuations of Arm’s peers. Nvidia Corp. crossed the $1 trillion mark in value this year, while the Nasdaq 100, a representative index for tech stocks, recorded its strongest January-June performance ever.
SoftBank offers investors the opportunity to invest in Arm as an AI play before its listing, making it an attractive choice for those wanting exposure to the AI market. Analyst Kirk Boodry from Astris Advisory believes that there could be further gains once Arm releases its public prospectus. The Vision Fund’s public holdings increased by about $1.1 billion in the June quarter, with companies like DoorDash Inc. and Grab Holdings Ltd. making significant contributions.
In July alone, the Vision Fund’s public portfolio saw a $3.9 billion increase in value, driven by the rallies of DoorDash, Grab, and Didi Global Inc. If SoftBank can maintain this pace for the rest of the quarter, the Vision Fund is poised to deliver its best aggregate performance since January-March 2021.
However, Boodry remains cautious, recognizing that July’s gains may not be sustained and highlighting that the current tech market seems priced for perfection. Nonetheless, the positive momentum is worth acknowledging, and the upside potential of Arm should provide support even if the Vision Fund’s overall performance appears weak.
While SoftBank’s rebound is encouraging, it is important to remain balanced and consider multiple perspectives. The ultimate success of SoftBank’s Vision Fund relies on factors such as the AI market, investor sentiment, and the performance of portfolio companies.
