SoftBank Group Offloads Entire Alibaba Stake After Jack Ma-Founded Company Causes $6.16B Loss

In a significant shift of focus, SoftBank Group has announced the sale of almost its entire stake in Alibaba Group Holding BABA BABAF. The move is part of the Japanese conglomerate’s pivot towards artificial intelligence (AI) investments.

What Happened: SoftBank’s investment portfolio has shifted from Alibaba to U.K. chip designer Arm Holdings, Nikkei Asia reported on Monday. Alibaba now accounts for “almost zero” of SoftBank’s net asset value, down from 48% in 2020. In contrast, Arm now accounts for 45% and SoftBank’s Vision Funds 29%.

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“This shows a shift to an AI-centric portfolio. Arm is core to our shift to AI and the assets held by us and the SoftBank Vision Fund,” Yoshimitsu Goto, chief financial officer, said during the earnings call.

SoftBank booked an investment loss of 558.3 billion yen in the fiscal year end March and the bulk of it came from the “realized and unrealized valuation losses on Alibaba shares of 959.9 billion yen [$6.16 billion].”

Why It Matters: SoftBank’s pivot to AI investments has been in the works for some time with founder Masayoshi Son shifting from venture capital to investments in semiconductors and AI.

Furthermore, SoftBank’s profits for the quarter ending in March exceeded analysts' expectations, driven by the soaring valuation of Arm Holdings, as it continues to amass funds for its AI expansion.

Earlier in 2024, Jack Ma and Joe Tsai emerged as the top shareholders of Alibaba, surpassing SoftBank.

Price Action: On Monday, Alibaba was trading 4.91% higher at $83.97 on Nasdaq at the time of writing while it was trading at $10.36 in the OTC pre-market after closing at $9.855 on Friday.

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