SoftBank Group Corp. Earnings - Q1 2027 Analysis & Highlights
SoftBank Group Corp. reported record net asset value of ¥72.3 trillion driven by strong investment gains, with strategic focus on AI infrastructure, Arm's exceptional performance, and significant OpenAI investment commitments. The company emphasized long-term value creation through its ASI (AI Software Infrastructure) platform strategy while maintaining conservative financial policies.
Key Financial Results
Net asset value reached ¥72.3 trillion at end of June, the highest ever recorded, compared to ¥58.3 trillion on a pro forma basis reflecting recent market movements.
Investment gain of ¥1.8 trillion for the first quarter, increased by ¥1.3 trillion year-over-year, primarily driven by Intel and ByteDance fair value increases.
Net income of ¥347 billion for the first quarter.
Cash position decreased from ¥3.5 trillion at March end to ¥2.3 trillion, due to bond redemptions and investment activities, but maintains necessary cash positions based on financial policy.
Loan to value ratio of 13% at end of June, described as a very safe level, compared to the company's 25% threshold financial policy.
Business Segment Results
Arm Holdings
Revenue hit record high of $1.3 billion in the first quarter, representing 22% year-over-year growth.
Fully diluted earnings per share reached record high at $0.47 midpoint guidance for the second quarter, representing 29% year-over-year growth in the first quarter.
Second quarter revenue guidance midpoint of $1.38 billion, exceeding analyst consensus.
Arm-based CPU cores for data centers growing significantly, with many hyperscalers adopting Arm-based CPUs including Graviton, Axion, Cobalt, and Grace.
Arm AGI CPU attracting more demand than expected, with orders exceeding $2 billion and two new launch partners announced: Oracle and Verda.
Arm AGI CPU compared to x86 helps save up to $10 billion CapEx per 1 gigawatt of data center capacity.
OpenAI
$20 billion invested in OpenAI during the first quarter, with remaining $10 billion committed towards October, bringing total investment to $64.6 billion and ownership to 13%.
Codex for software engineers grew 25 times in seven months, from 0.4 million weekly active users in December 2025 to 10 million in July.
ChatGPT Work released recently for business users, with combined Codex and ChatGPT Work weekly active users growing 25 times in seven months.
GPT-5.6 represents latest revision with enhanced agentic functionality, performing highest in UC Berkeley evaluation methodology with lower cost compared to other AI models.
Vision Fund
Cumulative investment return of $47 billion since inception as of end of June.
Vision Fund 1 cumulative investment return of $114 billion, with $73 billion already exited.
Average monetization of approximately $1.5 billion per quarter in recent quarters, with major divestments including Coupang, Roivant, Full Truck Alliance, and DoorDash.
Late-stage portfolio total fair value of $133 billion, increased by $15 billion compared to March end, primarily due to follow-on investment in OpenAI.
PRISM (formerly OYO) and Klook identified as promising late-stage companies, with PRISM having filed for public offering and Klook showing good business momentum since 2019 investment.
PayPay
T&D Financial Life made a subsidiary of PayPay Corporation in June 2026, enabling comprehensive financial services including life insurance based on user life stages.
Capital and business alliance with Seven & i Holdings announced, with SoftBank Corp., PayPay, and Sumitomo Mitsui Card each investing ¥100 billion for approximately 2.13% ownership stake.
PayPay has 75 million user base with 30 million transactions per day, and Seven & i Holdings operates 22,000 7-Eleven stores with 20 million customers per day.
Capital Allocation
$20 billion invested in OpenAI during first quarter, with $10 billion remaining commitment.
$5.4 billion committed for ABB Robotics acquisition, with LBO financing of maximum $1.8 billion arranged ahead of acquisition.
$3.1 billion committed for DigitalBridge M&A announced last year.
$10 billion financing agreement using OpenAI shares arranged.
Total committed investment of $18.5 billion for OpenAI ($10 billion remaining), ABB Robotics ($5.4 billion), and DigitalBridge ($3.1 billion).
No change to financial policy, maintaining loan to value below 25% in normal circumstances and at least two years' worth of bond redemptions in cash position.
Industry Trends and Dynamics
AI infrastructure demand significantly outpacing supply, with data center projects announced one after another in the United States.
Supply shortage for computing power, with technology and AI service development potentially slowed without securing adequate computing capacity.
Agentic AI deployment accelerating across cloud and various devices, with NVIDIA announcing chips for PCs with agentic functionality based on Arm Grace CPU.
Arm-based CPU adoption by approximately 50% of leading hyperscalers, demonstrating significant market penetration and brand recognition.
Physical AI commercial deployment accelerating, with over 30 Physical AI businesses in SoftBank's portfolio across robotics, infrastructure automation, and autonomous driving.
Competitive Landscape
OpenAI positioned as partner rather than investment, with SoftBank choosing to concentrate all LLM investment in OpenAI rather than spreading across competitors.
Chinese AI models improving and competition in LLM space intensifying, though SoftBank maintains focused investment strategy with OpenAI.
Arm's dominant market share in chip design, with Arm designing the core and heart of all chips and having dominant market position.
Arm's in-house chip development representing significant strategic shift, moving beyond traditional IP licensing to develop high-quality, high-capability chips for AI infrastructure.
Macroeconomic Environment
Market volatility experienced between March and June 2026, with SoftBank's net asset value reflecting market movements.
Tech share prices slowed down in US market, with financing market remaining active despite interest rate increases over past few years.
Interest rate environment increasing financing costs, though investment yield levels can offset interest costs to acceptable extent.
Global financing market quite activated, with positive demand and supply balance between issuers and investors.
Current situation not characterized as bubble, with clear use of proceeds in financing for real business needs.
Growth Opportunities and Strategies
ASI (AI Software Infrastructure) platform provider strategy, with focus on four correlated areas: AI infrastructure, Arm, OpenAI, and Physical AI.
AI infrastructure development as core strategic focus, addressing infrastructure to accelerate AI model development and deployment by hyperscalers.
5-gigawatt AI data center development in France announced, with €45 billion investment for first phase delivering 3.1 gigawatt capacity in northern France by 2031.
France data center project includes sites in Dunkirk, Bouchain, and Bosquel, with first gigawatt Bosquel AI data center designated as fast-track project by French government.
France's unique advantage as power exporting country, enabling data center development without requiring double CapEx for power generation plants as needed in other regions.
Supply chain development for AI data center equipment in France, with SoftBank and Schneider establishing local supply chain for power modules in Dunkirk.
PORTS Technology Campus in Pike County, Ohio announced for 10-gigawatt large-scale data center project, currently in final stages of lease agreement discussion with construction expected to start in 2026.
Milam County, Texas AI data center with lease agreement placed with OpenAI, with building construction on track for delivery.
SB Energy playing important role in data center projects, with cumulative project capital raised of approximately $19 billion and power generation and storage capacity under operations or construction of about 5 gigawatt.
SB Energy filed confidential Form S-1 filing in May 2026, indicating preparation for future development.
Neocloud service launched in United States, providing AI compute via cloud with power and data centers provided by SB Energy through special purpose company.
PaaS (Patching as a Service) launched by SB OAI Japan joint venture, offering cybersecurity solution to be rolled out to 3,000 companies in Japan with end-to-end vulnerability assessment and patch application.
ABB Robotics acquisition announced, with completion expected by end of year, integrating huge operations and services globally to deliver synergies and accelerate robot deployment.
Physical AI portfolio expansion, with robotics, humanoid, factory automation, and autonomous driving identified as key sectors with handful of portfolio companies expected to play key roles.
Financial Guidance and Outlook
Arm second quarter revenue guidance midpoint of $1.38 billion, exceeding analyst consensus.
Arm second quarter EPS guidance midpoint of $0.47, exceeding analyst consensus.
Arm AGI CPU demand expected to double year after fiscal 2027, with order pipeline continuing to grow and new customers expected to be announced.
Arm AGI CPU demand possibly ahead of expectations, with supply chain constraints around wafer capacity being primary limitation on near-term revenue recognition.
OpenAI remaining $10 billion investment commitment towards October, bringing total investment to $64.6 billion.
Ohio data center construction expected to start in 2026, with overall schedule details to be shared when ready.
France data center first phase targeting delivery by 2031, with 3.1 gigawatt capacity planned.
Confidence in data center demand, with management closely communicating with off-takers to ensure best solution.
Long-term focus on mid- to long-term period, with company not becoming too happy or sad about short-term market fluctuations.
Investment Strategy and Portfolio Management
Strategic investment holding company approach, with job to ensure portfolio companies work together to raise corporate value.
No predetermined investment budget, intentionally avoiding budget constraints to maximize performance and avoid forced investments or missed opportunities.
Investment decisions based on opportunity quality, with company investing from balance sheet to maximize performance.
S&P revised outlook from negative to stable, representing positive rating development.
Strong corporate credit capacity, with approximately ¥60 trillion net asset value after debt providing strong financial position.
