SoftBank shares hit 6-mth high on windfall from AI-fueled Arm

Investing.com– Shares of Japanese conglomerate SoftBank Group Corp. (TYO:) rallied on Thursday, tracking a roughly $16 billion windfall from an overnight bounce in subsidiary Arm after the British chip designer forecast stronger earnings on the back of an AI-led boom in chip demand. 

SoftBank shares jumped 8% to 7,144.0 yen- their highest level since early-August 2023. They were among the top performers on the , which rose 0.6%. 

U.S.-listed shares of Arm jumped as much as 41% in aftermarket trade after the chip designer forecast fourth quarter earnings well above market expectations. The firm said it expects to benefit greatly from an increased push into artificial intelligence development over the coming months. 

Arm expects demand for its smartphone chips- where it holds a dominant market position- to improve as companies begin working on devices that can natively run AI features.

The firm is also a key supplier to NVIDIA Corporation (NASDAQ:), which is at the heart of an AI-led boom in chip demand. 

Arm generates revenue largely from licensing fees on its chip designs. 

Arm’s overnight bounce saw the firm double in value since its IPO in late-2023. The spike in its shares provides a windfall to SoftBank, with CNBC reporting that the conglomerate saw its stake in the chip designer surge by almost $16 billion. 

SoftBank had purchased Arm for about $32 billion in 2016, and had taken the firm public in 2023 at a valuation of $47 billion. The tech conglomerate still holds a roughly 90% stake in Arm. 

Arm represents the biggest bet so far by SoftBank CEO Masayoshi Son on an AI-led boom in technology valuations. Son had last year flagged an aggressive approach to investing in AI, amid the growing popularity of generative AI tools such as OpenAI’s ChatGPT. 

SoftBank is set to report its earnings for the December quarter later on Thursday, with Reuters forecasting the firm’s first quarterly profit in five. The firm is expected to have benefited greatly from a spike in tech valuations through late-2023, amid increasing optimism over AI. 

Focus will also be on any potential buybacks by SoftBank.