SoftBank shares soar another 10% after Arm's stock rises 48%

SoftBank owns about 90% of Arm and founder Masayoshi Son has pledged to explore ways to use Arm’s chip designs as he pursues AI-related investments. The Tokyo-based company reported its first profit after four quarters of losses on Thursday, with its Vision Fund also logging a profit in the December quarter.

“Arm’s results, while singularly impressive, were part of a diverse combination of tailwinds stemming from SoftBank’s AI, telecom, and broader tech portfolio,” Macquarie analysts Paul Golding and Emma Liang wrote in a note.

“The remaining question now is on net new investments, whether cash will or can be deployed in the context of quickly rising AI valuations, and high-quality criteria for investing from management’s perspective,” the note said.

New investment activity by the second Vision Fund dwindled to $90 million, a fraction of the billions that SoftBank used to wield in the startup space. Bets on startups have been outpaced by exit activity in recent quarters.

“New investments are crucial to sustain its profit recovery,” said Bloomberg Intelligence analyst Marvin Lo. “Results are good in general. The only concern I have is that the company might be struggling to find good AI investment opportunities, echoed by a decline in investment value.”