Despite recent market volatility, investors remain optimistic about further gains for Japanese technology investor SoftBank Group, which is seeing strong performance in its stock portfolio. The company is expected to report a quarterly profit of 287 billion yen ($1.87 billion) on Tuesday, driven by successful listings of portfolio companies, though a stronger yen has slightly reduced foreign currency-denominated gains.
Investors are also looking for indications of new investment momentum, fueled by SoftBank’s strong balance sheet and the management’s optimistic outlook on artificial intelligence (AI). The stock has surged from a one-year low to a six-year high, thanks to the company’s aggressive IPO strategy and its growing portfolio of tech unicorns—companies valued at $1 billion or more.
The company’s stock has risen more than a fifth this year as investors have renewed confidence in AI’s potential. SoftBank’s founder, Masayoshi Son, has long viewed AI as one of the world’s most important technologies. However, significant losses in some of its existing holdings in recent quarters have made the firm cautious.
In the third quarter, the value of the Vision Fund’s shares in publicly traded companies like Uber and DoorDash rose as global markets rallied, but a loss from derivatives trading wiped out those gains. SoftBank has said it will curb that risk, and the company’s founder has promised to slash debt levels.
SoftBank has a crowded pipeline of tech IPOs, but it’s unclear whether it will be able to generate the same blockbuster results as last year when more than 100 of its companies went public. That’s mainly because the global stock market has recently lost some of its luster, and some companies that went public in the past 12 months have struggled.
Nevertheless, SoftBank has seen some good news from analysts in the form of several recent upgrades. Jefferies was among the most recent to upgrade the company, and it now has 18 buy recommendations versus five holds and no sells. That makes the company a strong contender to be upgraded again next week when several brokerage firms release their reports. The company’s stock closed up 0.7% to 2,780 yen on Wednesday. The Tokyo-based company’s portfolio of investments includes WeWork, Arm and Graphcore. It also has stakes in Alibaba and T-Mobile US.