SoftBank turned a profit in Q3, but net profit significantly fell short of expectations, with a ¥2.8 trillion investment return from a heavy stake in OpenAI in the first three fiscal quarters | Earnings report insights
The financial report shows that in Q3 of the fiscal year 2025, the net profit reached 248.59 billion yen, turning a profit compared to the same period last year, but only meeting 30% of market expectations. The improvement in performance is mainly attributed to AI investments, particularly the heavy bet on OpenAI, which contributed 2.8 trillion yen in paper gains over the first three fiscal quarters. In addition, the Vision Fund has significantly recovered, and SoftBank has also liquidated T-Mobile stock to support its AI strategy
SoftBank successfully turned a quarterly profit thanks to substantial gains from its investments in artificial intelligence.
On February 12, SoftBank announced its third-quarter report for the fiscal year 2025, showing that the net profit for the third quarter reached 248.59 billion yen (approximately 1.6 billion USD), ending a previous loss. This performance was primarily attributed to Masayoshi Son's heavy investment in OpenAI, with the surge in AI valuations contributing significant paper gains for SoftBank.
However, the actual performance still fell significantly short of market expectations. Analysts had previously estimated SoftBank's net profit to be around 857 billion yen, while the actual result was only about 30% of that expectation. This indicates a significant gap between investor expectations and reality for the Japanese tech giant.
Nevertheless, the explosive growth of the OpenAI investment has become the core driver of SoftBank's financial performance, with paper gains from this investment reaching 19.8 billion USD (2.8 trillion yen), nearly offsetting the volatility impacts from other business segments. OpenAI has quickly grown to become one of SoftBank's most important assets. As of December last year, SoftBank's Vision Fund II (SVF2) had invested over 30 billion USD in the ChatGPT developer, accumulating an 11% stake and becoming a significant shareholder in this AI star company.
The strong recovery of the Vision Fund was the biggest highlight of this quarter. The financial report showed that this segment achieved a profit of 735.49 billion yen, a significant turnaround from a loss of 309.93 billion yen in the same period last year, with investment returns reaching 374.99 billion yen, completely reversing the loss of 352.75 billion yen in the same period last year. This performance indicates that after experiencing a tech stock winter in 2022-2023, SoftBank's investment portfolio is rejuvenating.
At the same time, SoftBank continues to adjust its asset structure. The financial report indicated that during the period from June to December 2024, it sold T-Mobile shares for 12.73 billion USD, providing ample ammunition for its significant investments in the AI sector. The net sales for the third quarter reached 19.8 trillion yen, an 8.2% year-on-year increase, slightly exceeding market expectations, while the cumulative net profit for the first nine months reached a staggering 31.7 trillion yen.
Core Performance: Turning Losses into Profits but Falling Short of Expectations
In the third quarter, SoftBank Group achieved a net profit of 248.59 billion yen, turning losses into profits year-on-year, but only reaching 29% of market expectations.
This significant gap reflects an overly optimistic expectation from the market regarding the revaluation of SoftBank's investment portfolio, or that the timing of profit recognition on certain investment projects was later than anticipated.
Revenue performance was relatively stable, with net sales reaching 19.8 trillion yen, an 8.2% year-on-year increase, slightly surpassing the market expectation of 19.6 trillion yen.
For the first nine months, the company achieved a net profit of 31.7 trillion yen and net sales of 57.2 trillion yen, indicating strong overall fiscal year performance.
Vision Fund: Significant Rebound in Portfolio Value
The Vision Fund segment was undoubtedly the largest contributor to performance this quarter. This segment achieved a profit of 735.49 billion yen, improving by over 1 trillion yen from a loss of 309.93 billion yen in the same period last year In terms of investment income, it turned from a loss of 352.75 billion yen in the same period last year to a profit of 374.99 billion yen, with a cumulative reversal of over 720 billion yen.
From the perspective of investment portfolio size, the Vision Fund 1 (SVF1) held 53 investments at the end of the period, a decrease of 1.9% quarter-on-quarter; the Vision Fund 2 (SVF2) held 277 investments, a decrease of 0.7% quarter-on-quarter. The slight contraction in the number of investments indicates that SoftBank is optimizing its portfolio and focusing on core assets.
OpenAI's Big Bet: $34.6 Billion Gamble on Artificial Intelligence
SoftBank's investment in OpenAI is arguably the most strategically significant move in this financial report. In October 2024, OpenAI completed its restructuring, transitioning from OpenAI Global, LLC to OpenAI Group PBC, with investors including SVF2 becoming shareholders of the new entity.
In December 2024, SoftBank participated in the completion of OpenAI's $31 billion Series B funding round. In this massive financing, SVF2 invested $22.5 billion, while external investors contributed $8.5 billion through joint investments. As a result, SVF2's total investment in OpenAI reached $34.6 billion, holding approximately 11% of the shares, making it one of the most important institutional investors in the company.
Currently, SoftBank is negotiating a new round of investment in OpenAI of up to $30 billion, which could value the AI star startup at $750 billion to $830 billion. If the deal is completed, it will further solidify SoftBank's position as one of OpenAI's largest investors and may trigger a revaluation of SoftBank's equity stake.
According to BTIG analyst Jesse Sobelson's estimates, OpenAI currently accounts for about 30% of SoftBank's net asset value (NAV), ranking alongside Arm, the chip design company in which SoftBank holds about 90% equity, as the group's largest holdings.
BTIG emphasized in its research report that OpenAI's next capital raise could prompt the market to reassess the value of SoftBank's equity, becoming an important catalyst for its stock price. Notably, BTIG stated that it expects to receive or seek compensation for investment banking services from SoftBank within the next three months.
In addition to heavily investing in OpenAI, founder Masayoshi Son is accelerating the layout of other segments of the artificial intelligence ecosystem, attempting to play a more significant role in shaping the future technology landscape. Through Arm's leading position in chip design and investments in cutting-edge AI companies like OpenAI, SoftBank is building a complete AI industry chain from underlying hardware to application layers.
Asset Adjustment: Selling T-Mobile Shares to Strengthen Liquidity
To support large-scale investments in the AI field, SoftBank continues to optimize its asset portfolio. The financial report shows that the company sold T-Mobile shares between June and December 2024, cashing out $12.73 billion (approximately 1.9 trillion yen).
This selling strategy continues SoftBank's recent "sell old, buy new" approach—realizing cash from mature assets to reinvest in cutting-edge technology fields like AI T-Mobile stock was an important asset acquired by SoftBank through the Sprint merger. After years of appreciation, it was cashed out at the right time for a new strategic direction, reflecting Masayoshi Son's flexibility in asset allocation.
Abundant cash flow provides solid support for SoftBank's aggressive AI investments and alleviates market concerns about its financial leverage
