Japan's SoftBank Group is expected to post a quarterly net profit of 234 billion yen

Japan's SoftBank is expected to report a quarterly net profit of 234 billion yen on Wednesday. This was largely due to a rise in the shares of its telecoms holding company and the post-IPO performance of Swiggy, which boosted the value of its portfolio of unlisted technology start-ups.

However, analysts are divided on whether SoftBank's recently announced AI-related investments will have a positive or negative impact on the company's performance.

The net profit of Y234bn, based on the average of four analyst forecasts collected by LSEG, was down from Y950bn in the same period last year. SoftBank expects further gains from its investment in T-Mobile US, the US telecoms unit of Deutsche Telekom, whose shares hit a record high in late November and rose 7 per cent in the quarter.

Meanwhile, Swiggy, an Indian delivery company, saw its shares rise 17 per cent when it went public in November and nearly 20 per cent by the end of December.

Analysts believe this could signal a revival in the market for initial public offerings (ipos), particularly in India, which could in turn drive up the valuation of SoftBank's portfolio of hundreds of unlisted technology companies.

However, the future impact of SoftBank's major AI investments announced in the past two months remains uncertain.

SoftBank President Masayoshi Son's pledge in December to invest $100 billion in artificial intelligence projects in the United States over four years could mean SoftBank needs to sell or liquidate assets in its portfolio or take on excessive debt, analysts said.

Meanwhile, Son last week announced a joint venture with ChatGPT maker OpenAI, which plans to provide AI services to Japanese corporate customers and promote OpenAI's products among SoftBank's portfolio companies. Some analysts believe this could bring efficiency gains for SoftBank's portfolio companies, but others worry that the $3 billion in annual royalties paid to OpenAI could depress short-term earnings.