SoftBank Group has reported a surge in quarterly profit due to valuation gains on its OpenAI investment, boosting confidence at the Japanese company to bet even more on the ChatGPT-maker.

The gains on OpenAI outweighed lackluster investment gains elsewhere in the Tokyo-based technology group¡¯s portfolio while war in the Middle East roiled markets. That points to growing reliance on the U.S. startup, which faces rising competition from Anthropic and Google and is reportedly trailing its highest internal targets.

SoftBank earned a net income of ?1.83 trillion ($11.6 billion) in its fiscal fourth quarter, compared with the average analyst estimate of ?295.2 billion. The profit could be attributed entirely to its booking of $25 billion in valuation gains on OpenAI in the quarter, according to Bloomberg Intelligence analyst Kirk Boodry.

Founder Masayoshi Son has been unwinding positions and raising SoftBank¡¯s debt load to pay for an expanding list of bets on artificial intelligence. The company, which secured a $40 billion bridge loan facility in March, has unfurled grandiose plans spanning hundreds of billions of dollars¡¯ worth of investments in data centers.

Since SoftBank¡¯s first investment in OpenAI at a valuation of $157 billion, the U.S. startup¡¯s valuation has surged to $852 billion. SoftBank has committed to raising its total investment in OpenAI to $64.6 billion by the end of the year.

¡°SoftBank¡¯s history has been good in investment records and perhaps better than people sometimes allow,¡± said Richard Kaye, co-head of Japan equity strategy at Comgest Asset Management.

But SoftBank¡¯s business is supported by a range of other assets, including chip designer Arm Holdings and the telecom unit SoftBank Corp., Kaye said. SoftBank owns about 90% of Arm, whose stock rallied 38% during the March quarter.

¡°It¡¯s very difficult for any of the global mega-tech companies to diversify their bets between competing players,¡± he said. ¡°SoftBank is not really any different in that sense.¡±

SoftBank¡¯s Vision Fund segment, which includes the company¡¯s holdings in OpenAI, reported an investment gain of ?3.08 trillion. Shares of SoftBank¡¯s key public holdings, including Coupang and Grab Holdings, slumped during the period. The vast majority of companies in SoftBank¡¯s Vision Fund portfolio is privately held, hindering analysts¡¯ ability to make estimates.

Both Arm and SoftBank¡¯s mobile unit ¡ª Japan¡¯s third largest ¡ª are broadening their operations into AI hardware. Arm now plans to sell its own chips, while the wireless business plans to expand into neoclouds and manufacture battery cells geared for AI data centers.

SoftBank Group is preparing to create AI robotics company Roze for a possible U.S. listing, it has been reported. Son has also held talks about unveiling an ambitious French AI data center project with French President Emmanuel Macron...