SoftBank Group reported a net loss of 1.1 trillion yen ($7 billion) for the three months ended September, a sharp reversal from the profit it posted a year earlier, as growing concerns over artificial intelligence investments weighed on the Japanese company's results, the Associated Press reported.

A Sharp Reversal From a Year of Profit

The loss marks a major turnaround for the Tokyo-based company, which earned a profit of 2.5 trillion yen in the same period a year earlier, according to the AP. Revenue, however, continued to grow, rising 16% to 2.2 trillion yen from 1.9 trillion yen a year earlier. The Wall Street Journal attributed the loss to special losses linked to U.S. data center projects, while Reuters described the result as a swing to a net loss for the second quarter. Special losses are one-off items recorded separately from a company's regular operations, which is why SoftBank could record a large net loss even as its revenue grew.

SoftBank's earnings can move quickly because they depend on how the company's investments perform. Through its Vision Funds, which invest in tech startups and large technology companies, the group holds stakes in OpenAI, the developer of ChatGPT, and chipmaker Arm Holdings, among others. The values of these businesses are prone to sharp rises and dips.

SoftBank Founder Sold Nvidia Stake Before Huang Reports

Founder Masayoshi Son built SoftBank around internet technology before expanding into artificial intelligence, telecommunications, robotics and online shopping. He is also a close friend of Nvidia CEO Jensen Huang.

Son sold his Nvidia shares before reports emerged linking Huang to an alleged affair with a Chinese government agent. The matter is reportedly under investigation by Nvidia and US authorities. Nvidia is a leading supplier of the processors used to develop and run AI systems.

According to the AP, US President Donald Trump said during a White House briefing on Monday that the FBI was looking into another matter and expressed confidence that Huang would be fine. The reports have also raised questions about whether China has gained access to Nvidia's AI chips.

Shares Rose Ahead of the Earnings Report

SoftBank's shares have lost almost a third of their value in the past year. However, they rose nearly 14% in Tokyo on Tuesday before the earnings report.

The results underscore how much SoftBank relies on a small number of major technology investments. Shifts in their values can have a big impact on its profits, making the company's financial results harder to predict. How the group discloses further detail on its U.S. data center losses, and how the valuations of holdings such as OpenAI and Arm are marked in coming quarters, are among the points to watch as the company's fiscal year continues.

Source: Cryptopolitan