Looks like Masayoshi Son's plan to go all in on AI is starting to pay off for SoftBank

• SoftBank CEO Masayoshi Son's bet on AI seems to be paying off.

• The Japanese conglomerate posted a $1.5 billion profit in its latest quarter.

• The gains come off the back of its big bet on the chip firm Arm Holdings.

Masayoshi Son once branded those dismissive of artificial intelligence as a bunch of "goldfish." Stuck in a bowl, they'd watch as the world around them finds new freedoms thanks to the technology.

It's a bold view; but it's one that's starting to look like reality for the Japanese billionaire.

SoftBank, the Tokyo conglomerate Son founded during Japan's boom years in the early 1980s, signaled that its all-in bet on AI was starting to pay off after posting its latest earnings on Monday.

Despite an annual net loss of about $1.46 billion, the company posted a profit of about $1.48 billion for the first three months of 2024, capitalizing on profit momentum generated in the previous quarter.

A key driver of SoftBank's gains over successive quarters has come from its stake in Arm Holdings.

The UK chip firm, which SoftBank acquired in 2016 for $32 billion, has seen its stock price soar since its September IPO as investors buy in to its fresh focus on AI.

Arm, whose chip design is used by companies such as Apple, is looking to deploy its tech with AI companies, particularly those that service the highly intensive computing needs of generative-AI operators.

SoftBank has benefited from this because it has a 90% stake in Arm, which has doubled in value to over $110 billion since the listing.

"Arm is central to our AI shift," Yoshimitsu Goto, SoftBank's executive corporate officer of finance, said on Monday. Soft Bank's net-asset value jumped 45% from its last quarter to $178.3 billion — driven by Arm's soaring share price.

For Son, the profits could offer reassurance that he's on the right track with AI after years of hit-and-miss investments in other technologies through startup betting.

Arguably the biggest investment flop for Son came from his backing of WeWork, the real-estate startup that filed for bankruptcy in November after once being valued at $47 billion.

SoftBank has also had mixed success with a duo of venture-capital funds run out of London called Vision Funds, which have sprayed cash at startups globally since 2017. Some of the funds' bets, such as those on pizza-robot and dog-walking startups, have since imploded.

Son's critics have questioned whether the billionaire could ever replicate the success he enjoyed from a $20 million investment in Alibaba in 1999 that's made him $72 billion.

But as the appetite for Arm's AI activities shows, SoftBank has room to grow in the face of this latest boom. Son seems aware of this, with the company selling down several Vision Fund investments in recent months to plow fresh cash into AI opportunities.

There are still risks, however, as AI euphoria since ChatGPT's introduction in November 2022 has sent the stocks of companies like Nvidia to dizzying heights, leaving investors to wonder if a downturn might be around the corner.

With about $40 billion in cash on hand at the end of March, Son should be ready to step up his search for AI's next big thing. If he's able to make the right bets, AI could pay off handsomely for him in the long term.

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