AI Boom Makes SoftBank’s Masayoshi Son Richest Person In Japan Again

SoftBank Group founder Masayoshi Son reclaimed the crown as Japan’s richest person after a four-year gap, with shares of his Tokyo-listed investment conglomerate surging over 60% this year amid investor optimism over its AI prospects.

The 68-year-old mogul, who is SoftBank’s chairman and CEO, has a net worth of $50.5 billion largely based on a company stake, according to Forbes estimates. That amount surpasses his previous peak wealth of $45.4 billion in 2021. He is now richer than Uniqlo parent Fast Retailing founder Tadashi Yanai, who has a fortune of $46.8 billion, according to The Real-Time Billionaires List.

Son ceded the crown to Yanai in 2022 as Softbank shares plunged after record losses racked up by its giant Vision Funds investment units. Now, the conglomerate’s investments in AI-related companies—notably ChatGPT creator OpenAI—are perceived as positioning the company for growth.

“Softbank offers a way for public investors to get exposure to the AI theme,” Dan Baker, a Melbourne-based senior equity analyst at research firm Morningstar, says by email.

Investors are piling into SoftBank because OpenAI is privately held, preventing them from acquiring a piece of a company that has come to symbolize the AI boom. SoftBank and OpenAI have formed strategic partnerships such as the $500 billion Stargate AI infrastructure project and investment agreements. SoftBank is the lead investor in OpenAI’s recently announced $40 billion funding round that values the ChatGPT creator at $300 billion. It plans to put as much as $30 billion into the American company, with the remaining $10 billion being syndicated out to undisclosed co-investors.

SoftBank has made other AI-related bets as Son pursues the goal of artificial super intelligence (ASI), or AI that he describes as “ten thousand times more intelligent than human wisdom.” SoftBank recently raised its Nvidia stake and acquired shares worth hundreds of millions of dollars in Oracle and Taiwan Semiconductor Manufacturing Company (TSMC).

Meanwhile, Arm Holdings, the Nasdaq-listed chip design firm about 90% owned by SoftBank, announced this year plans to make its own semiconductors, a significant change to its business model of selling software only. It is attempting to exploit rising demand for semiconductors that can process data faster for various AI services.

SoftBank, which also wants to spend $6.5 billion to acquire U.S. chip design firm Ampere Computing, announced last week net income of 421.82 billion yen ($2.9 billion) for the three months that ended in June compared with a loss of 174.3 billion yen a year earlier, and much higher than the 127. 6 billion yen in profits forecast by analysts. Its revenues rose 7% year-over-year to 1.8 trillion yen.

But over the past few years, SoftBank has been trading at a significant discount to its net asset value. Investors have concerns over the firm’s financial leverage and what is often perceived as an aggressive investment style.

That discount has narrowed to about 40% from 50% earlier in the year as people start to realize SoftBank’s direction is “correct,” Chief Financial Officer Yoshimitsu Goto said during an analyst call last Thursday. He conceded in the call that Stargate’s progress was slower than expected, as it took time to select sites and put together financing for data centers.

If SoftBank continues to sink money into Stargate, debt risk could heighten, says Morningstar’s Baker. SoftBank currently has a loan-to-value ratio of 17%, below the company’s self-imposed cap of 25%. This metric measures SoftBank’s debt against the value of its equity holdings to gauge its financial health.

Peter Milliken, a Hong Kong-based analyst at Deutsche Bank, wrote in a Monday research note that SoftBank may sell assets to fund its investments in OpenAI and Stargate. The company already sold in June $4.8 billion worth of T-Mobile shares to fund its AI investments.

Baker says SoftBank may sell more T-Mobile shares or shares in Arm for investment purposes. But he also maintains that the Japanese conglomerate probably wants to retain control of Arm, or pledge its shares as collateral for financing.