(Corrects to state that SoftBank has recorded an investment gain of $19.8 billion on OpenAI rather than anticipates one in paragraph 7)
TOKYO, Feb 12 (Reuters) - Japan's SoftBank Group booked a fourth consecutive quarterly profit on Thursday, helped by the rising valuation of its OpenAI investment and took on more debt as it deepened its exposure to the red-hot artificial intelligence sector.
SoftBank reported a net profit of 248.6 billion yen ($1.62 billion) in the October-December quarter, compared with a net loss of 369 billion yen over the same period the previous year.
The technology and investing conglomerate's earnings have been flattered by the rising valuation of its investment in ChatGPT-maker OpenAI, even as the market questions the risk of overexposure to a single firm.
Five analysts surveyed by LSEG projected quarterly net income in a range between a gain of 1.1 trillion yen ($7.07 billion) and a loss of 480 billion yen.
Masayoshi Son's conglomerate has now invested more than $30 billion in OpenAI, building a shareholding of around 11%, in an "all-in" wager it will emerge as a winner in the battle between competing developers of large language models.
OpenAI is reportedly seeking another capital injection of $100 billion, with SoftBank joined by Amazon and Nvidia as prospective investors at a yet higher valuation of $830 billion.
SoftBank said it recorded a total investment gain on its OpenAI investment of $19.8 billion at December-end.
To finance its bets, SoftBank has turned to asset sales, bond issuance and loans backed by its other holdings, such as chip designer Arm.
RAISING FUNDS
The heavy exposure to OpenAI means SoftBank is increasingly viewed as a publicly traded proxy for the U.S. firm, with investors examining the impact of its spending spree on its finances.
The OpenAI stake is housed within the Vision Fund 2 investment vehicle, 17% of which is owned directly by SoftBank founder and CEO Son.
SoftBank has already exited its position in Nvidia and, between June and December last year, sold part of its stake in T-Mobile for $12.7 billion.
The conglomerate expanded a margin loan using shares in Arm to $20 billion from $13.5 billion previously and has used the remaining capacity.
SoftBank also raised its borrowings against shares of its domestic telecoms unit SoftBank Corp to 1.2 trillion yen from 800 billion yen.
While OpenAI was once considered the dominant player among makers of large language models, it has been negotiating rising costs to train and run its AI models amid intensifying competition from the likes of Alphabet.
OpenAI is laying the groundwork for an initial public offering in what could be one of the biggest listings ever, Reuters reported last year.
SoftBank's loan-to-value ratio, a measure of indebtedness, was 20.6% at December-end, compared with 16.5% three months earlier. Its cash pile decreased to 3.8 trillion yen over the same period.
SoftBank's shares closed up 2.4% in a flat market before its earnings were released.
($1 = 153.2500 yen)
(Reporting by Anton Bridge; Writing by Sam Nussey; Editing by Jacqueline Wong)
