SoftBank stock sinks 4% before earnings reveal an Intel-powered profit surprise

SoftBank Group stock tanked 4.41% in Tokyo on Thursday as investors reduced exposure to a volatile Asian AI trade before the company released its first-quarter results.

The caution looked premature when the numbers arrived after the market closed.

SoftBank reported net income attributable to shareholders of ¥347.3 billion, down 17.7% from a year earlier but comfortably above the ¥148.4 billion consensus.

A ¥1.33 trillion gain on Intel provided the surprise, turning founder Masayoshi Son’s $2 billion investment into the quarter’s main profit driver.

The disconnect suggests Thursday’s share decline reflected anxiety about SoftBank’s concentrated, debt-funded AI strategy rather than disappointment with the results.

SoftBank earnings: Intel turns a risky bet into the quarter’s biggest winner

SoftBank agreed in August 2025 to buy $2 billion of Intel shares at $23 each, backing the chipmaker during a difficult restructuring.

The wager had looked contrarian when Intel was struggling to revive manufacturing, defend market share and establish an AI strategy.

That position generated a ¥1.33 trillion paper gain as Intel shares rallied. SoftBank’s total investment gains reached ¥1.86 trillion, compared with ¥486.9 billion a year earlier.

Morningstar analyst Brian Colello raised his Intel fair-value estimate to $105 from $90 after the chipmaker’s latest results, citing a sharp increase in demand for server processors.

Intel’s Data Center and AI revenue grew 59%, encouraging Morningstar to adopt stronger long-term assumptions for server computing.

Wedbush analyst Matt Bryson also raised his Intel price target to $98 from $60 while retaining a Neutral rating, Benzinga reported.

Bank of America’s Vivek Arya maintained a Buy rating and a $160 target, arguing that Intel’s server business was participating meaningfully in the agentic-AI cycle.

Those views give SoftBank’s gain a stronger fundamental foundation, although it remains an unrealised mark-to-market benefit rather than operating cash flow.

Profit beat carries an earnings-quality warning

SoftBank’s headline profit still fell from ¥421.8 billion a year earlier, showing how much the quarter depended on portfolio valuations rather than recurring operations.

The group recorded no gain or loss on OpenAI during the period, after a $25 billion valuation gain from the holding had powered the previous quarter.

That pattern matters because SoftBank’s profits can change dramatically when one or two holdings are revalued.

The Intel gain was substantial, but foreign-exchange movements, derivatives and financing costs absorbed much of the broader investment windfall.

The results were a clear earnings beat, but not an uncomplicated improvement in profit quality.

The underlying concern remains whether SoftBank can generate sufficient cash while financing investments whose valuations may fluctuate sharply.

SoftBank’s AI ambitions keep the balance-sheet question alive

SoftBank has committed $64.6 billion for an estimated 13% stake in OpenAI. It had invested $44.6 billion by June, added another $10 billion in July and plans a further $10 billion contribution in October.

The group has arranged a $40 billion bridge facility that expires in March 2027 and agreed to borrow another $10 billion against its OpenAI shares.

It has also sold holdings including Nvidia and T-Mobile to fund its expansion.

Further commitments include $5.4 billion for ABB’s robotics business and $3.1 billion for DigitalBridge, alongside investment in data centres, energy and AI infrastructure.