SoftBank Group's shares dropped 4.41% in Tokyo on Thursday as investors trimmed positions in the volatile AI trade ahead of the company's fiscal first-quarter earnings release. The caution proved premature when the numbers landed after the market close, revealing a profit beat powered by an unexpected gain from Intel.
Net income attributable to shareholders came in at ¥347.3 billion, down 17.7% year over year but well above the ¥148.4 billion consensus estimate. The standout driver was a ¥1.33 trillion gain on SoftBank's investment in Intel, turning founder Masayoshi Son's $2 billion bet into the quarter's biggest profit contributor.
The pre-earnings selloff likely reflected anxiety about SoftBank's concentrated, debt-funded AI strategy rather than disappointment with the results. The company has committed $64.6 billion for an estimated 13% stake in OpenAI, with $44.6 billion already invested by June, an additional $10 billion in July, and a further $10 billion planned for October.
Intel bet pays off
SoftBank agreed in August 2025 to buy $2 billion of Intel shares at $23 each, backing the chipmaker during a difficult restructuring. The wager looked contrarian at the time, given Intel's struggles with manufacturing, market share, and AI strategy. But Intel's shares rallied, generating the ¥1.33 trillion paper gain. Total investment gains reached ¥1.86 trillion, up from ¥486.9 billion a year earlier.
Analysts have turned more positive on Intel. Morningstar's Brian Colello raised his fair-value estimate to $105 from $90, citing a 59% jump in Intel's Data Center and AI revenue. Wedbush's Matt Bryson lifted his price target to $98 from $60, while Bank of America's Vivek Arya maintained a Buy rating and $160 target, arguing Intel's server business is participating meaningfully in the agentic-AI cycle.
These views give SoftBank's gain a stronger fundamental foundation, though it remains an unrealized mark-to-market benefit rather than operating cash flow.
Earnings quality concerns
Despite the beat, headline profit still fell from ¥421.8 billion a year earlier, underscoring how much the quarter depended on portfolio valuations. The group recorded no gain or loss on OpenAI during the period, after a $25 billion valuation gain from that holding powered the previous quarter.
This pattern matters because SoftBank's profits can swing dramatically when one or two holdings are revalued. The Intel gain was substantial, but foreign-exchange movements, derivatives, and financing costs absorbed much of the broader investment windfall. The results were a clear earnings beat, but not an uncomplicated improvement in profit quality.
The underlying concern remains whether SoftBank can generate sufficient cash while financing investments whose valuations may fluctuate sharply. The company has arranged a $40 billion bridge facility expiring in March 2027 and agreed to borrow another $10 billion against its OpenAI shares. It has also sold holdings including Nvidia and T-Mobile to fund expansion.
Additional commitments include $5.4 billion for ABB's robotics business and $3.1 billion for DigitalBridge, alongside investments in data centers, energy, and AI infrastructure. These moves keep the balance-sheet question alive, even as the Intel gain provides a temporary boost.
For context, Intel's path to profitability remains a key watchpoint, while AMD's AI data center growth and Marvell's valuation concerns highlight the broader sector's volatility.
This article is for informational purposes only and does not constitute financial advice.
