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SoftBank is betting big on AI — and so far it seems to be paying off.
The Japanese conglomerate reported its second-quarter earnings on Tuesday, with net profit more than doubling to 2.5 trillion yen, or $16.6 billion.
It also disclosed that it has cashed out its stake in Nvidia, the biggest benefactor of the AI boom, for $5.8 billion.
Here are the three key takeaways about the AI race from SoftBank's earnings.
Out with Nvidia, all in on OpenAI
SoftBank said on Tuesday that it sold all of its 32.1 million shares in Nvidia in October.
The company's CFO, Yoshimitsu Goto, said in an earnings presentation, which was translated by the company, that its decision to divest has "nothing to do with Nvidia itself" but is a way to reallocate its funds toward OpenAI.
"This year the OpenAI investment is large," he said, adding that it plans to make the final part of its $30 billion investment by the end of the year. "For that, we do need to divest our existing portfolio so that it can be used for our financing," he said.
SoftBank's investment in OpenAI has generated a cumulative paper gain of about $7.7 billion, per its investor presentation. Goto said SoftBank's stake in OpenAI is about 11%.
The conglomerate previously sold its investment in Nvidia in 2019, before the AI boom began, and later reinvested.
SoftBank is bullish on 'physical AI'
SoftBank sees "physical AI" as the next wave of the AI revolution. The term describes AI that's moved from the digital world into the physical realm, such as robotics and autonomous vehicles.
Goto said that these technologies would intersect to provide more services, adding that this is "coming very close to our life."
In October, SoftBank acquired the robotics division of Swiss engineering firm ABB for $5.4 billion. SoftBank also holds stakes in British autonomous vehicle startup Wayve and service robots company Bear Robotics.
SoftBank is also a partner in Stargate, a $500 billion project to build AI infrastructure such as data centers. Goto said on the earnings call that SoftBank would share more about its financial involvement once the projects are complete.
SoftBank can't say if there's an AI bubble
The massive amount of capital going into AI and record-high valuations has sparked fears of an AI bubble.
SoftBank's CFO said he couldn't say for sure if that's the case.
"I don't think I can answer whether this is a bubble or not," Goto said. "We will be able to tell later, but this is because the technology is just at the beginning and there is lots of movement, which I believe is a good thing."
Masayoshi Son, the CEO of SoftBank, has previously made clear that AI is his primary bet. Goto echoed this position on the earnings call.
"There will be ups and downs for investment companies like us," Goto said. "What's important is the trend — that we keep increasing our value over time."
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