SoftBank posts quarterly profit on OpenAI valuation boost

The result marks the company’s fourth consecutive profitable quarter and contrasts with a net loss of 369 billion yen recorded in the same period a year earlier, News.Az reports, citing Reuters.

SoftBank’s earnings were bolstered by gains tied to the rising valuation of OpenAI, the developer of ChatGPT. Although the valuation increase in the third quarter was smaller than in the previous three months, it still contributed positively to the group’s performance. Over the nine months ending in December, OpenAI generated an investment gain of approximately 2.8 trillion yen for SoftBank.

The Japanese technology investor has committed more than $30 billion to OpenAI, building a stake of around 11% in what it has described as a decisive bet on the company’s ability to prevail in the intensifying competition among developers of large language models.

To finance these investments, SoftBank has relied on asset disposals, bond issuance, and loans secured against its other holdings, including chip designer Arm Holdings. Between June and December last year, the group sold its $5.8 billion stake in Nvidia and part of its holding in T-Mobile for $12.73 billion.

The asset sales have raised concerns among some investors about SoftBank’s capacity to continue funding OpenAI, which remains unprofitable. In December, the group increased the amount it can borrow against shares of its telecom subsidiary, SoftBank Corp, to 1.2 trillion yen from 800 billion yen.

Although OpenAI was once widely viewed as the dominant player in the large language model market, it is now grappling with escalating costs associated with training and operating advanced AI systems, as well as intensifying competition from rivals such as Alphabet.