SoftBank Profit Dips 18% Amid Rising Costs Despite AI Investments
The Japanese tech investor's quarterly profit fell to $2.2 billion as higher expenses offset gains from its aggressive investments in artificial intelligence and other futuristic technologies.
SoftBank Group Corp. reported an 18% drop in its fiscal first-quarter profit, with higher costs impacting earnings despite significant investments in artificial intelligence. The technology investor posted a profit of 347.3 billion yen ($2.2 billion) for the April-June period, a decrease from 421.8 billion yen in the same quarter a year earlier.
Despite the profit decline, quarterly sales increased by nearly 11% to 2 trillion yen ($12.7 billion). SoftBank's Chief Financial Officer Yoshimitsu Goto indicated that business operations involving Arm, a British semiconductor and software design company, are performing well.
The company has continued its substantial investment in artificial intelligence, adding an additional $20 billion to OpenAI and planning further investments in the current fiscal year.
SoftBank's investment strategy, primarily channeled through its Vision Fund, involves significant stakes in emerging technology companies. This approach, while capable of yielding substantial returns, also carries inherent risks. Among its portfolio companies are TikTok's parent company ByteDance, U.S. chip maker Intel Corp., Japanese mobile payment service PayPay, and Taiwan Semiconductor Manufacturing Company (TSMC).
Founded in 1981 by Chief Executive Masayoshi Son, SoftBank began its focus on internet and computer-related businesses. Over time, its investment scope has broadened to include a diverse range of advanced technologies, such as autonomous driving and robotics through its involvement with ABB Robotics, which specializes in automation and robotic arms.
SoftBank Group does not provide annual financial forecasts. Following the earnings report, the company's shares closed 4% lower in Tokyo trading.