Japan’s SoftBank Group Corp. (OTCMKTS: SFTBY) has had a tumultuous year thus far.
Although the investment company’s stock is up 43.22% on a year-to-date (YTD) basis at press time, worries surrounding high levels of AI spending have sent SFTBY shares down by double digits on two separate occasions since the beginning of 2024.
Since those downward moves, the stock has largely stabilized on account of share buyback programs and several successful initial public offerings (IPOs).
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On November 12, a brand new deal with semiconductor manufacturer Nvidia (NASDAQ: NVDA) was announced — one which could see SoftBank stock price soar and the company become an early mover in terms of integrating AI and telecommunications.
SoftBank has become Nvidia’s first supercomputer customer
This pivotal announcement could prove to be a turning point for both businesses. SoftBank is slated to build Japan’s most powerful AI supercomputer using Nvidia’s Blackwell platform and DGX SuperPOD data center infrastructure. The deal also includes plans for a second, more powerful supercomputer to be built at an as-of-yet undetermined date using NVIDIA Grace Blackwell architecture.
The Japanese investment firm aims to establish the country’s first artificial intelligence radio access network (AI-RAN) — in essence, a network that can simultaneously run both AI and 5G workloads.
This would turn the company’s 200,000 base stations into ‘mini data centers’, opening up a wide variety of use cases — with SoftBank CEO Masayoshi Son highlighting scientific research, education, and startups as areas of special interest.
SoftBank stock could become a big AI winner
The partnership was announced at Nvidia’s AI summit in Japan, which also saw the SoftBank CEO disclose his plans for AI-powered robotics. It appears that the investment company has doubled down on AI — having also recently announced the field trial of an autonomous vehicle AI system.
Masayoshi Son’s focus on AI is nothing new — however, the high capital expenditures associated with the field were a source of worry for investors.
Those worries seem to have abated, for now at least — on November 12, the company also released its Q2 2024 earnings report, which saw its biggest quarterly profit in two years. Net profits came in at $7.7 billion, significantly outperforming analyst estimates of $1.87 billion, as well as the $6 billion loss seen in the same period last year.
If this latest development bears fruit, SoftBank could secure a strong base of recurring revenue going forward. The business estimates that it can achieve a return of up to 219% for every AI-RAN server it adds to its infrastructure, while Nvidia deemed the intersection between telecommunications and AI as an area that could unlock billions of dollars in revenue for businesses.
At press time, SFTBY shares are trading at $30.95 — the news initially saw the stock surge by 5.6% to $32.20, although it has since receded back to $30.95. While a surge has not occurred in the immediate term, the partnership could cause a significant rally once the new AI-RAN system is deployed.
Featured image via Shutterstock
