SoftBank set to book $1.87B profit thanks to IPOs
What's the story
Japanese technology investor, SoftBank Group, is expected to announce a quarterly profit of ¥287 billion ($1.87 billion) today.
The massive financial turnaround is largely due to the successful initial public offerings (IPOs) of its portfolio companies.
The forecast for the July-September period starkly contrasts a loss of ¥931 billion during the same period last year.
Investment gains
IPOs of Indian firms boost SoftBank's profit
MST analyst David Gibson predicts an investment gain of $3.9 billion for the quarter.
The IPOs of two Indian companies, Brainbees Solutions and Ola Electric, are expected to contribute significantly to this figure.
These successful listings are projected to generate income of $0.9 billion and $1 billion, respectively.
Financial outlook
Currency fluctuations and future investment plans
A 10% drop in the US Dollar's value against the Yen over this period could affect SoftBank's bottom line.
However, analysts are eagerly looking forward to SoftBank's future investment strategies.
This interest was sparked after CEO Masayoshi Son revealed at a Saudi Arabian investment summit last month, that he had set aside tens of billions of dollars for future ventures.
Strategic moves
Investment pace and AI focus
Notably, the pace of new investments by SoftBank has already increased, hitting $1.9 billion in the April-June quarter from $0.3 billion in January-March.
Earlier this month, SoftBank also joined the latest funding round for ChatGPT operator OpenAI.
The move is in line with the company's strong focus on artificial intelligence (AI) as a key area for future growth and investment.
Market competition
Potential AI chip production and robust finances
Analysts are closely watching SoftBank's reported plans to manufacture AI chips that could rival market leader NVIDIA.
This could potentially be a collaboration between Arm, a chip designer where SoftBank holds a 90% stake, and recently acquired chip manufacturer Graphcore.
"It's balance sheet is 'near the strongest it has been over the past five years,'" wrote Morningstar analyst Dan Baker in a note.