SoftBank's Vision Fund tech arm experiences significant growth in quarterly earnings.

The Japanese giant recorded a 608.5 billion yen ($3.96 billion) profit in its Vision Fund tech investment arm in the second quarter, ending September 30, after experiencing a significant increase in earnings following a loss in the previous quarter.

The broader Vision Fund segment, which includes non-investment performance such as administrative expenses and gains and losses attributable to third-party investors, reported a gain of 373.1 billion yen in the company's first fiscal quarter, after declaring a loss of 204.3 billion yen in the same period.

The SoftBank Vision Fund 1's valuation gains were the primary contributor to the company's increase in share prices, as seen in the higher valuations of e-commerce firm Coupang and Chinese ride-hailing giant Didi Global, as well as the value increase of its investments in Chinese tech company Bytedance.

The Vision Fund has profited from the September 2023 IPO of smartphone chip designer, in which it holds a substantial 90% stake.

Masayoshi Son's tech conglomerate is now focusing on the artificial intelligence boom, where companies like NVIDIA are benefiting from the meteoric demand for chips and data center GPUs.

Son, an early investor in Yahoo! and Alibaba, now considers Nvidia, a $3.57 trillion U.S. giant, undervalued and predicts the emergence of AI that is 10,000 times more intelligent than humans within a decade, coinciding with recent reports that SoftBank will invest $500 million in OpenAI's latest funding round.

The value of SoftBank shares listed in Tokyo has increased by approximately 51% so far this year.

In August, SoftBank announced a $3.25 billion share buyback after facing pressure from activist investor Elliott Management, which had built a roughly $2 billion stake in the company and pushed for a $15 billion share buyback, as reported by CNBC in June.

Despite the rapid strengthening of the yen and a dramatic sell-off of risk assets in August, Japanese companies faced high fluctuations in the summer quarter. Now, Japan's domestic markets have calmed relative to the summer turmoil, as the country navigates its transition away from its ultra-low-rate policy. However, analysts at Barclays warn that Japan's economic horizon is not yet stable.

The BOJ anticipates wage growth in the service sector to continue, leading many to expect another interest rate hike in December 2024 or January 2025.