SoftBank To Focus Cash on AI in New Offensive --- Japan tech investor's firepower is boosted by money from sale of shares in Alibaba.

"TOKYO -- Japanese technology investor SoftBank Group said it was getting ready to go on the offensive again with its eye on investing in artificial-intelligence companies, a buzzy area it has long targeted but failed to capitalize on.

One of the world's most influential tech investors, SoftBank has been in a defensive crouch for over a year, slashing its once profligate spending after many of its investments in startups went sour during the recent tech downturn.

The company reported on Thursday a smaller net loss in the quarter ended March of 57.6 billion yen, equivalent to around $430 million. That is far less than the $15.7 billion loss a year earlier. The company also signaled a shift in direction in its aggressiveness.

"We are getting ready to go on the offensive with the AI revolution on the horizon," said SoftBank Chief Financial Officer Yoshimitsu Goto. Shares in some SoftBank-backed tech companies have begun to rebound, he said.

Giving it fresh financial firepower, SoftBank cashed out almost its entire stake in Chinese e-commerce company Alibaba Group in recent months.

The promise of AI to transform businesses has gained extraordinary attention in boardrooms and marketing departments alike because of the introduction of ChatGPT, the artificial-intelligence chatbot developed by Microsoft-backed research company OpenAI.

Mr. Goto spent a good portion of his presentation praising ChatGPT.

He said SoftBank Chief Executive Masayoshi Son -- who has stopped attending his company's quarterly financial presentations -- has been dedicating time to studying SoftBank's approach to artificial intelligence and working on plans for the listing of its chip-design unit, Arm.

"AI has finally come, especially generative AI," Mr. Goto said. SoftBank's chief executive "is as excited today as when he launched the company," he said.

The renewed embrace of the technology comes after Mr. Son has spent the better part of a decade pledging that SoftBank was fully focused on the forthcoming "AI revolution." Mr. Son has said AI is the unifying theme of his $100 billion Vision Fund startup investment vehicle launched in 2017.

But those investments largely went to companies without obvious grounding in AI such as office-space company WeWork, hotel company Oyo and an array of ride-hailing apps. Meanwhile, SoftBank didn't invest in OpenAI. Mr. Goto declined to comment to reporters why it didn't.

SoftBank is turning to AI as it says goodbye to Alibaba, the most successful investment in Mr. Son's more than four-decade career.

He backed Alibaba in its infancy in 2000, and as recently as mid-2021 SoftBank's stake in the Chinese company was worth the equivalent of nearly $100 billion.

In recent years, SoftBank has cashed in its Alibaba holdings through financing deals that handed it money upfront while leaving it the option of keeping the shares later. Ultimately it has given up many of the shares outright, and Mr. Goto said virtually all of SoftBank's remaining Alibaba shares have been used to procure funds.

Over the past year, SoftBank's stake in Alibaba has helped ride out losses in its two Vision Funds.

After posting a record loss equivalent to more than $20 billion in the April-June quarter, SoftBank reported an equally large profit in the quarter ended in September because of profits from Alibaba transactions.

Overall, for the year ended March 31, SoftBank lost $7.2 billion, smaller than its $12.6 billion loss a year earlier.

Those losses are due largely to pain in SoftBank's Vision Fund unit, as the company continues to gradually write down the value of the hundreds of privately held startups it owns stakes in.

While public tech stocks have recently rebounded some, SoftBank reported $3.9 billion in losses in the private holdings of the unit for the quarter.

Its $50 billion Vision Fund 2 -- which invested in scores of companies including online lender Klarna and now bankrupt cryptocurrency company FTX -- has lost over $18 billion, based on those lowered valuations. Some analysts expect the valuations to fall further.

In its latest results out Thursday, the company said it had cut new investments in startups to about $3 billion in the year ended in March, less than a tenth of its investments the previous fiscal year.

Mr. Goto said SoftBank's unwinding of its stake in Alibaba was part of broader efforts to diversify its investments across companies and regions of the world.

Mr. Goto said the company has put more priority on investing in the U.S. and Europe as it looks to minimize geopolitical risks related to U.S.-China frictions and the events in Ukraine.

China accounted for 14% of the equity value of SoftBank's holdings as of March, down from 50% two years earlier, driven by the unwinding of the company's Alibaba stake.

Mr. Goto said Mr. Son was excited at how ChatGPT achieved 100 million monthly average users in just two months.

"I spend time with him every day," Mr. Goto said of his boss, "and I try not to be overwhelmed by him too much."

Earlier this week, Junichi Miyakawa, president of SoftBank's mobile unit, said he had set up a team to work on launching a Japanese version of ChatGPT.

Mr. Miyakawa said Mr. Son had recently given a presentation to group engineers on ways to use the AI chatbot." [1]

1. SoftBank To Focus Cash on AI in New Offensive --- Japan tech investor's firepower is boosted by money from sale of shares in Alibaba. Davis, River; Brown, Eliot. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 12 May 2023: A.1.