SoftBank Group Corp. has returned to profitability for the quarter, driven by substantial unrealized gains from its investments in artificial intelligence. The company reported a net profit of 2485.9 billion yen (approximately $16 billion) for its third fiscal quarter, ending a previous period of losses. This performance was largely attributed to Masayoshi Son's significant bet on OpenAI, with the AI boom contributing considerable paper gains to SoftBank's portfolio. However, the actual results fell significantly short of market expectations. Analysts had, on average, forecast a net profit of around 8570 billion yen for the quarter, meaning the reported figure represents only about 29% of the anticipated amount. This indicates a notable gap between investor expectations for the Japanese tech giant and the current reality. Despite this, the explosive growth in the value of the OpenAI investment has become a central driver of SoftBank's financial performance. The paper gain from this investment reached $198 billion (2.8 trillion yen), nearly offsetting volatility in other business segments. OpenAI has rapidly become one of SoftBank's most critical assets. As of last December, SoftBank's Vision Fund 2 (SVF2) had invested over $30 billion in the creator of ChatGPT, accumulating an approximate 11% stake and establishing itself as a major shareholder in the prominent AI company. A strong recovery in the Vision Fund segment was the standout highlight of the quarter. The segment reported a profit of 7354.9 billion yen, a dramatic reversal from a loss of 3099.3 billion yen in the same period last year. Investment gains reached 3749.9 billion yen, completely turning around from a loss of 3527.5 billion yen a year earlier. This performance suggests that SoftBank's investment portfolio is regaining vitality after the tech stock downturn of 2022-2023. Concurrently, SoftBank continued to adjust its asset structure. The financial report showed that the company raised $12.73 billion from the sale of T-Mobile shares between June and December 2024, providing ample capital for its substantial AI investments. Net sales for the third quarter reached 19.8 trillion yen, an increase of 8.2% year-over-year, slightly exceeding market expectations. The cumulative net profit for the first nine months of the fiscal year reached a robust 31.7 trillion yen.

**Core Performance: Return to Profit Falls Short** For the third quarter, SoftBank Group achieved a net profit of 2485.9 billion yen, turning profitable compared to the year-earlier period, but this represented only 29% of market expectations. This substantial gap reflects that market optimism regarding the revaluation of SoftBank's investment portfolio was overly high, or that the timing of profit recognition for certain investments was later than anticipated. Performance on the revenue side was relatively stable, with net sales reaching 19.8 trillion yen, an 8.2% increase year-over-year, slightly surpassing the market consensus of 19.6 trillion yen. Cumulatively for the first nine months, the company reported a net profit of 31.7 trillion yen and net sales of 57.2 trillion yen, indicating a strong overall fiscal year performance.

**Vision Fund: Portfolio Value Rebounds Significantly** The Vision Fund segment was undeniably the largest contributor to the quarter's performance. The segment posted a profit of 7354.9 billion yen, marking an improvement of over 10 trillion yen from a loss of 3099.3 billion yen a year ago. In terms of investment gains, the segment recorded a profit of 3749.9 billion yen, a complete reversal from a loss of 3527.5 billion yen in the prior-year period, amounting to a cumulative swing of over 7.2 trillion yen. Regarding portfolio size, Vision Fund 1 (SVF1) held 53 investments at the end of the period, down 1.9% quarter-over-quarter. Vision Fund 2 (SVF2) held 277 investments, a decrease of 0.7%. The slight contraction in the number of investments indicates SoftBank is optimizing its portfolio and focusing on core assets.

**Major Bet on OpenAI: A $34.6 Billion Wager on AI** SoftBank's investment in OpenAI stands as the most strategically significant move highlighted in the earnings report. In October 2024, OpenAI completed a restructuring, transitioning from OpenAI Global, LLC to OpenAI Group PBC, with investors including SVF2 becoming shareholders in the new entity. In December 2024, SoftBank participated in the completion of OpenAI's second funding round, which totaled $31 billion. In this massive financing round, SVF2 invested $22.5 billion, while external investors contributed $8.5 billion through co-investments. This brought SVF2's total investment in OpenAI to $34.6 billion, for an approximate 11% stake, making it one of the company's most important institutional investors. Currently, SoftBank is in discussions regarding a new investment round in OpenAI that could reach up to $30 billion. This potential financing could value the high-profile AI startup between $750 billion and $830 billion. If the deal proceeds, it would further solidify SoftBank's position as one of OpenAI's largest investors and could trigger a revaluation of SoftBank's existing stake. According to estimates by BTIG analyst Jesse Sobelson, OpenAI currently represents approximately 30% of SoftBank's net asset value (NAV), making it one of the group's largest holdings alongside chip design company Arm, in which SoftBank holds about a 90% stake. BTIG emphasized in a research note that OpenAI's next capital raise could prompt the market to reassess the value of SoftBank's equity stake, acting as a significant catalyst for the share price. It is worth noting that BTIG indicated it expects to receive or seek investment banking services compensation from SoftBank within the next three months. Beyond its heavy investment in OpenAI, founder Masayoshi Son is accelerating efforts to build out other parts of the AI ecosystem, aiming to play a more influential role in shaping the future technological landscape. Through Arm's dominance in chip design and investments in frontier AI companies like OpenAI, SoftBank is constructing a comprehensive AI industry chain spanning from underlying hardware to the application layer.

**Asset Adjustment: T-Mobile Sale Bolsters Liquidity** To support its large-scale investments in AI, SoftBank continues to optimize its asset portfolio. The financial report indicated the company sold T-Mobile shares between June and December 2024, raising $12.73 billion (approximately 1.9 trillion yen). This divestment strategy continues SoftBank's recent approach of "selling mature assets to fund new ventures"—monetizing established holdings to generate cash for reinvestment in cutting-edge technologies like AI. The T-Mobile stake was a key asset acquired by SoftBank through the Sprint merger transaction. After years of appreciation, divesting at an opportune time to fund new strategic directions demonstrates the flexibility of Masayoshi Son's asset allocation. The ample cash flow provides solid support for SoftBank's aggressive AI investment strategy and alleviates market concerns regarding its financial leverage.