SoftBank Books ¥1.86 Trillion of Investment Gains on Intel Mark-Up, Yet Q1 Profit Falls 18% to ¥347.3 Billion

SoftBank Group Corp. (TSE: 9984) reported consolidated first-quarter results for the year to March 2027 under IFRS on August 6. Net sales rose 10.9% to ¥2,019,591 million, but profit before tax fell 14.6% to ¥589,150 million, quarterly profit slipped 8.0% to ¥518,987 million and profit attributable to owners of the parent dropped 17.7% to ¥347,330 million. Basic earnings per share were ¥60.08 against ¥72.93 a year earlier, with diluted EPS at ¥59.85. The result was the mirror image of the quarter before it: an enormous, headline-grabbing gain on the asset side was more than absorbed by costs and mark-to-market losses further down the income statement. Total comprehensive income, which captures items routed outside profit or loss, told a far happier story at ¥988,456 million, against a negative ¥96,719 million a year earlier.

An Intel mark-up powers ¥1.86 trillion of investment gains

Investment gains across the group totalled ¥1,859.4 billion in the three months, nearly four times the ¥486.9 billion booked a year earlier. The bulk of it — ¥1,382.2 billion — came from the Holding Company Investment segment, and within that a single line dominated: a ¥1,332.9 billion investment gain on shares in INTEL Corporation. The SoftBank Vision Fund segment contributed a further ¥460.1 billion of investment gains, excluding gains and losses on investments in subsidiaries such as PayPay. Since inception, cumulative gains stand at US$26.6 billion for SVF1 and US$21.3 billion for SVF2. One accounting nuance matters for readers trying to reconcile the numbers with share-price moves: because Arm and SoftBank Corp. are consolidated subsidiaries rather than portfolio holdings, changes in the fair value of their shares are not recognised in the consolidated income statement at all. The gains that do flow through are those on non-consolidated stakes — of which Intel is now by far the largest single contributor.

Another US$10 billion into OpenAI, at an unchanged valuation

SoftBank injected a further US$10 billion into OpenAI during the quarter, lifting cumulative investment in the company to US$44.6 billion. The fair value of that position stood at US$89.6 billion at quarter-end, implying a cumulative investment gain of US$45.0 billion — roughly a doubling of money committed. Notably, the valuation was unchanged from the prior period end, so none of the quarter's reported investment gains came from re-rating OpenAI; the position simply grew in size at the carrying multiple already in place. The commitment did not stop at the quarter boundary either: SoftBank invested a further US$10 billion in July 2026, after the reporting period closed. Between them, the two tranches represent the largest concentrated bet in the group's history, and the flat mark suggests management is content to fund the position at the existing valuation rather than chase it higher.

Why profit fell despite the gains

Profit before tax of ¥589.2 billion was ¥100.8 billion lower year on year, and the arithmetic of how a ¥1.86 trillion gain turned into a smaller pre-tax profit is worth setting out line by line. Selling, general and administrative expenses rose ¥528.7 billion to ¥1,286.9 billion, driven mainly by higher share-based compensation at the AI Computing segment and at Energy Global, which is reported within "Other." Finance costs climbed ¥163.4 billion to ¥328.7 billion as the group's borrowings expanded. Foreign-exchange losses of ¥146.1 billion represented a ¥289.3 billion year-on-year deterioration, and derivative-related losses of ¥391.6 billion a swing of ¥620.4 billion. Below the pre-tax line, income tax expense of ¥70.2 billion and profit attributable to non-controlling interests of ¥171.7 billion — a reflection of how much of the group's operating earnings sit in partly owned listed subsidiaries — left ¥347.3 billion for the parent's own shareholders.

A new AI Computing segment, and a deepening loss inside it

Following the acquisition of the entire interest in chip-design company Ampere in November 2025, the board reviewed its reporting units and, in the three months to December 31, 2025, created a new "AI Computing" segment combining Arm — previously reported as the standalone "Arm segment" — with Graphcore Limited and Ampere, both previously inside "Other." The prior-year quarter has been restated on the same basis. The group now reports four segments: Holding Company Investment, SoftBank Vision Fund, SoftBank and AI Computing. AI Computing posted a segment loss of ¥200,841 million on net sales of ¥175,253 million, a ¥168,430 million deterioration from the ¥32,411 million loss a year earlier, as research and development spending rose at Arm and its peers to develop next-generation technologies and share-based compensation stayed elevated. Elsewhere, Holding Company Investment swung to a ¥1,051,617 million profit from a ¥20,938 million loss — after absorbing ¥281.9 billion of finance costs and ¥147.9 billion of foreign-exchange losses. The SoftBank Vision Fund segment all but disappeared as a profit centre, earning ¥5,427 million against ¥451,394 million, a 98.8% collapse. The domestic telecom business, reported as the SoftBank segment, was the steady performer: profit up 5.0% to ¥292,538 million on net sales of ¥1,810,666 million, driven by the Finance and Enterprise businesses. Reportable-segment profit totalled ¥1,148,741 million against ¥676,585 million.

Balance sheet passes ¥65 trillion — and still no earnings guidance

Total assets swelled to ¥65,135,153 million at June 30 from ¥60,749,547 million three months earlier, while total equity rose to ¥21,352,852 million and equity attributable to owners of the parent to ¥18,421,451 million. Because assets grew faster than equity, the ratio of equity attributable to owners slipped to 28.3% from 29.0%. Financing ran at scale to match: the group raised ¥5,559.7 billion and repaid ¥3,935.1 billion on a consolidated basis during the quarter, of which SoftBank Group Corp. and its wholly owned finance subsidiaries accounted for ¥4,623.8 billion raised and ¥3,586.6 billion repaid, executing debt financing flexibly to fund large investments and to repay and refinance existing debt including bridge loans. A 4-for-1 split of common shares took effect on January 1, 2026, and per-share figures are computed as if the split had occurred at the start of the prior fiscal year; average shares outstanding during the quarter were 5,698,945,874 against 5,725,839,050. That split also complicates the dividend line: the FY3/2026 interim payment of ¥22.00 is stated on a pre-split basis and the year-end payment at ¥5.50 post-split, so the two cannot simply be added — on a split-adjusted basis the FY3/2026 annual dividend equals ¥11.00. For FY3/2027 the company forecasts ¥5.50 at the interim and ¥5.50 at the year-end, for ¥11.00 annually, unchanged from its previous announcement. One company, Rose Inc., left the scope of consolidation during the quarter. Investors looking for a profit target will not find one: SoftBank Group does not publish consolidated earnings forecasts, on the grounds that its results are dominated by unpredictable investment fair-value movements. An earnings briefing for the press and institutional investors was held on August 6, streamed in Japanese and English.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.