SoftBank soars as Nvidia earnings show strong momentum in AI

shares of Softbank Group skyrocketed on Thursday following blockbuster profits from Nvidia Overnight, it showed strong momentum in the field of artificial intelligence.

SoftBank Group stock had been declining for five consecutive sessions, but rose 19.8% on Thursday, adding about $35 billion to its market capitalization.

The company’s fortunes are closely tied to the AI ​​boom through its stake in Arm Holdings and its investment in OpenAI, whose chip designs are used in AI servers and data centers powered by NVIDIA systems.

The Japanese giant has invested more than $30 billion in OpenAI, and its investment returns totaled $45 billion in the year ended March.

Andrew Jackson, head of Japan equity strategy at Otus Advisors, said SoftBank’s surge was driven by renewed optimism around the possibility of an open AI listing, which helped Arm Holdings shares rise.

While this development was expected by much of the market, Jackson told CNBC that the scale of the move remains significant given SoftBank’s large exposure to AI-related assets. Arm Holdings Inc. closed up more than 15% in U.S. trading.

SoftBank Group last week posted an annual profit of $46 billion for its Vision Fund, largely due to the soaring valuation of Open AI as founder Masayoshi Son doubled down on his investments in artificial intelligence. SoftBank added that OpenAI-related profits totaled about $45 billion in the fiscal year that ended in March.

Analysts at Fitch Ratings unit CreditSights last week reiterated their “outperform” recommendation on SoftBank Group’s debt, adding that a sharp rise in Arm Holdings’ shares has significantly strengthened the conglomerate’s balance sheet despite aggressive investments in artificial intelligence.

Asian semiconductor stocks tied to Nvidia’s supply chain and the broader tech sector also rose on Thursday.

taiwan stocks TSMC It rose more than 2%. Nvidia relies heavily on TSMC to manufacture advanced AI processors. Japanese Renesas Electronicsa major supplier to Nvidia, rose more than 7%.

Japanese semiconductor manufacturing equipment manufacturer Tokyo ElectronNvidia, which provides essential chip manufacturing equipment to foundries that make chips, soared 5.44%.

SK Hynix, a leading provider of high-bandwidth memory chips used by Nvidia, soared more than 8%. Samsung Electronics rose 6.7%, boosted by news that the company and South Korean labor unions had reached a tentative wage agreement, allaying fears of a strike.

Stock prices of Japanese semiconductor testing equipment manufacturers Advantest It rose by 2.8%.

Nvidia reported a blockbuster quarter last night with revenue of $81.62 billion, up 85% from $44.06 billion in the year-ago period. The tech giant also announced an $80 billion share buyback program and raised its dividend.

But the company’s shares fell in post-market trading after CEO Jensen Huang told CNBC’s Sara Eisen that the company had “significantly conceded” China’s artificial intelligence chip market to Huawei.

—CNBC’s Arjun Kharpal contributed to this report.