SoftBank gets $8.2 billion boost from Intel as OpenAI takes a backseat

SoftBank on Thursday reported profit for its fiscal first quarter that beat market expectations, driven by a huge gain on its stake in Intel, while a rise in ByteDance’s value helped its Vision Fund division.

The Japanese giant said net profit for the June quarter totaled 347.3 billion Japanese yen ($2.2 billion). That beat the 120.23 billion expected by analysts, according to LSEG estimates. However, that was a nearly 18% year-on-year decline.

SoftBank saw a 1.3 trillion yen gain on the shares it owns of U.S. chipmaker Intel. SoftBank had announced a roughly $2 billion investment in Intel last year. This helped its investment division, which is separate from the Vision Fund, book segment profit of 1.05 trillion yen. Intel shares have surged nearly 400% over the last 12 months.

The Vision Funds, which house investments spanning OpenAI to TikTok-owner ByteDance, saw a gain of $1.7 billion in value in the first quarter. That was primarily driven by a $2.2 billion increase in the value of SoftBank’s stake in Chinese firm ByteDance, which offset declines in companies like PayPay.

SoftBank’s Vision Funds segment posted a 5.4 billion yen profit compared to 451.4 billion a year ago. The company said that it saw no gain or loss from its investment in OpenAI.

This is in contrast to the previous quarter, where the company’s Vision Funds posted a nearly $20 billion gain, nearly all driven by OpenAI.

OpenAI is facing intense competition from rival Anthropic, U.S. hyperscalers like Amazon as well as a swathe of Chinese open source players. Meanwhile, enterprises are looking closer at the spending on AI.

SoftBank can adjust the valuation of private companies in its portfolio if they believe there has been a material change in the scenario. But the company has not seen any new information to justify a change in the valuation of OpenAI, a person familiar with the matter told CNBC. SoftBank views the rise of more players in the sector as indicative of the growing nature of the market, the source said, adding that the competitive landscape is not of great concern to the Vision Fund team.

In June, OpenAI confidentially filed for an initial public offering. SoftBank would likely sell some of its holding in OpenAI when it goes public, but it would not be a “significant portion,” the person said.