Softbank Masayoshi Son: End Dormancy, All in AI

Original source: Securities Times

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On June 21, SoftBank Group held its annual general meeting of shareholders. Son Masayoshi, founder and CEO of SoftBank Group, said that he will end his relative dormancy and launch an offensive in the field of artificial intelligence. Sun Zhengyi also said that he is a heavy user of ChatGPT and often talks with OpenAI CEO Sam Altman (Sam Altman). Shares of SoftBank Group Corp., which is listed on the Tokyo Stock Exchange, rose 3.68 percent on Wednesday and have already risen as much as 26.7 percent this month.

SoftBank Group (9984.T) Year-to-date share price trend

Sun Zhengyi: Artificial intelligence is the way out

At the SoftBank Group shareholders meeting on June 21, Masayoshi Son said: "In the past few years, we have focused on 'defense'. Three years ago, we did not have a lot of cash on hand. But since we have been in defensive mode, Our cash on hand has increased to 5 trillion yen (about 35.3 billion U.S. dollars). Now, we are ready to switch to offensive mode. I am excited about it."

As for the specific "offensive" direction, Sun Zhengyi hinted that it will be in the direction of artificial intelligence.

"I am most interested in the artificial intelligence revolution. I believe that human beings will be surpassed by computers or artificial intelligence. We want to be the leader of the artificial intelligence revolution!" Masayoshi Son said. He even asked ChatGPT to write a new adventure for Osamu Tezuka’s classic Astro Boy: “AI is creating stories as if it were human. The AI revolution is exploding.”

Son also said he talks to OpenAI CEO Sam Altman "almost every day." Altman, who has made several high-profile visits to Tokyo this year, hopes to capitalize on interest in generative AI to influence regulation of the nascent technology globally.

The day before, Sun Zhengyi said at the shareholder meeting of SoftBank Group's telecommunications subsidiary: "I chat with ChatGPT every day, and I am a heavy user."

While calls for stronger regulation of AI are growing within the industry, Son wants to see generative AI regulations that don’t impede progress.

ARM valuation raised Softbank share price rebounded

"SoftBank is trying to change its destiny," Japanese stock strategist Amir Anzadeh said after the SoftBank shareholder meeting.

"You can see why Nvidia wanted to buy ARM a few years ago, because obviously they wanted all the architecture to be their own. Looking back now, it kind of makes sense." Acquire ARM.

"We believe that the current value of ARM is around 30 billion US dollars. But if it reaches 60 billion US dollars after listing, considering the current pursuit of artificial intelligence by investment institutions, this price does not seem too crazy." An Wozade said.

Before this week, Masayoshi Son had been out of the public eye for a long time. He hasn't chaired SoftBank's earnings call since November.

SoftBank Group, which focuses on investing in start-ups, was once regarded as an investment myth. However, after the outbreak of the new crown epidemic, the global financial environment of high inflation and high interest rates has severely damaged SoftBank's investment portfolio, mainly technology companies. Plunging tech valuations have forced SoftBank's Vision Fund to post multibillion-dollar losses for five straight quarters.

On May 11, SoftBank Group released its full-year financial report for fiscal year 2022 (April 2022 to March 2023). SoftBank Group's net revenue in fiscal year 2022 was 6.57 trillion yen (US$48.8 billion), a year-on-year increase of 5.6%; net profit was a loss of 970.14 billion yen (US$7.2 billion), compared with a loss of 1.7 trillion yen in fiscal year 2021 It has narrowed, but it is still significantly worse than the market's expected loss of 343.71 billion yen.

SoftBank Group has suffered net profit losses for two consecutive fiscal years. The main source of losses for SoftBank Group is still the Vision Fund. Data show that the SoftBank Vision Fund lost 4.31 trillion yen ($32 billion) in fiscal year 2022, an increase of 68.8% year-on-year. Currently, the Vision Fund Phase 1 (SVF1) holds a total of 76 investments (not including exits), including 23 listed companies and 53 start-up companies; the investment cost is US$65.6 billion, and the fair value is US$55.9 billion. By 2022 Fiscal year unrealized valuation losses (net) were $14.7 billion. Vision Fund 2 (SVF2) holds a total of 271 investments (not including exits), including 14 listed companies and 257 start-up companies; the investment cost is US$48.6 billion, and the fair value is only US$29.5 billion. The annual unrealized valuation loss (net) was $18.6 billion.

In addition to the losses in invested projects, SoftBank's new investment has almost stagnated in the past period of time.

In November last year, Sun Zhengyi announced that he would no longer preside over SoftBank Group's financial report meeting, but instead focus on the IPO of its chip design company ARM. Many investors even interpreted this move as Sun Zhengyi's imminent retirement.

But ARM's IPO prospects are becoming clearer thanks to the popularity of generative AI and talks with potential major investors, including Intel. The company is seeking to raise as much as $10 billion, and brokerages are raising their price targets for SoftBank. SoftBank Group shares have risen more than 30% so far this quarter and are on track for their best quarterly performance in three years.