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As Vision Fund losses top $32bn, SoftBank prepares for fresh AI bet

The Japanese conglomerate has been cashing in some of its investments so it can back more promising AI ventures.

By Ryan Morrison

After its Vision Fund reported record losses of $32bn, SoftBank plans to sell off more Alibaba stock to fund new investments in artificial intelligence. CFO Yoshimitsu Goto told reporters “AI is finally here” and suggested the company would go into “offense” mode making more big bets on automated systems.

SoftBank put itself in 'defense' mode where it stopped making major investments (Photo: Michael Vi/Shutterstock)
SoftBank put itself in ‘defense’ mode where it stopped making major investments. (Photo: Michael Vi/Shutterstock)

SoftBank’s Vision Fund was launched in 2017 with the backing of Saudi Arabia’s Public Investment Fund. It was the brainchild of founder Masayoshi Son with a $100bn mission to invest in high-growth tech stocks. The goal was to put money into companies building technologies that include AI or that follow AI trends across a wide range of sectors which included finance, construction and transportation. 

Using the $100bn fund, the company had some early successes including South Korean e-commerce company Coupang which allowed the Vision Fund to post a record $37bn profit in 2021. However, this has been offset by notable losses and failures including a “flow of easy money” to the coworking company WeWork, which went on to suffer heavy losses.

The year to the end of March saw the fund lose $32bn, an update from SoftBank issued earlier today revealed.

The fund is a major player in the technology investment world. It has the potential to significantly impact the development of technology companies and the global economy. Following a string of losses and a slowdown in the economy, the company announced it was going into “defense” mode last year, but that seems to be changing with the advent of generative AI.

Since the launch of OpenAI’s ChatGPT in November 2022 generative AI has gone from being an emerging technology to a central part of some of the most widely-used consumer and enterprise software packages. It is being built into Microsoft 365, Google’s Workspace and even the full Salesforce suite

SoftBank’s opportunities in generative AI

Goto said the company would not miss opportunities to invest in generative AI, but would still show some caution as it was not ready to fully accelerate back to previous levels of investment.

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It entered “defense” mode as it prepared for the listing of Arm on the New York Stock Exchange. This saw it halt investments and sell off shares in some of its larger investments such as Uber and Alibaba. This money could be put towards investments in AI companies.

Last quarter the fund only invested $400m, with Goto saying political tensions including the Russian invasion of Ukraine had created uncertainty. “Just because the last three months were good,” he told reporters, “we can’t go back to resuming investments.”

Last quarter it sold $7.2bn of Alibaba shares. This followed a $29bn sell-down last year. This will eventually see SoftBank bring its stake in the ecommerce group to 3.8%. Goto said it used its shares in Alibaba for refinancing after multiple losses in recent years. 

“We need to look at whether we should stick to our defensive strategy, or whether we should also be on offence,” Goto told reporters. “We don’t want to miss investment opportunities.”

Goto is a long-time lieutenant of Son, who has taken a step back from the public eye to focus on shoring up the business plan for Arm ahead of its upcoming IPO. He says Son is very optimistic about the promise of AI. “It makes me worried if he has time to sleep,” Goto said during a press conference.

Read more: Arm pricing changes could see customers look elsewhere for chips

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