SoftBank shares extend their surge, pop more than 15% on earnings beat

KEY POINTS

• Shares of SoftBank Group rose as much as 15.29% on Friday morning after the firm posted earnings that exceeded analysts' estimates.
• "Arm is convincing more people it is leveraged into AI. This is going to be a very positive inflection point for the story on Softbank stock," said Oliver Matthew, head of consumer Asia at CLSA, on CNBC's "Squawk Box Asia" Friday.

SoftBank's Vision Fund, the brainchild of the company's founder Masayoshi Son, has faced a number of headwinds including a slump in technology stocks as a result of rising interest rates, a tough China market and geopolitics.

Kentaro Takahash | Bloomberg | Getty Images

Shares of SoftBank Group rose as much as 15.29% Friday morning, a day after the Japanese investment firm posted earnings that beat analysts' expectations.

SoftBank's on Thursday posted its first quarterly profit following four quarters of losses, thanks to big gains at its Vision Fund. For the December quarter, SoftBank's net income was 950 billion Japanese yen ($6.36 billion), far exceeding LSEG estimates of 196.5 billion yen.

Its flagship tech investment arm the Vision Fund booked investment gains of 600.7 billion Japanese yen, continuing a recovery after record losses in the previous fiscal year.

On Wednesday, SoftBank-owned Arm, which designs chips for smartphones and a range of other devices, beat earnings estimates and offered a strong forecast as AI boom has been boosting sales.

This lifted SoftBank shares, which closed 11.06% higher at 7,350 yen on Thursday, according to LSEG data. They extended gains on Friday and were last trading at 8,090 yen.

Arm is among the beneficiaries of the AI boom that started last year on increased interest in generative AI after the launch of OpenAI's ChatGPT in November 2022. Shares of the Nasdaq-listed Arm soared nearly 48% on Thursday.

"Arm is convincing more people it is leveraged into AI. This is going to be a very positive inflection point for the story on Softbank stock," said Oliver Matthew, head of consumer Asia at CLSA, on CNBC's "Squawk Box Asia" Friday.

SoftBank Group CFO Yoshimitsu Goto on Thursday said the firm has gone through a shift from an Alibaba-focused to an AI-focused portfolio.

SoftBank was known for its early bet on Chinese tech juggernaut Alibaba in 2000, but has cut its stake in Alibaba recently.

According to Goto, SoftBank's stake in Alibaba had fallen to nearly zero by the end of the December quarter, down from 50% at the end of December 2019. Meanwhile, Arm's share in SoftBank's asset portfolio has risen from 9% to 32% in the same period.

– CNBC's Vivien Soo contributed to this report.