SoftBank Group shares soar 20% as Nvidia earnings signal strong AI momentum

Shares of SoftBank Group skyrocketed Thursday as blockbuster earnings from Nvidia overnight signaled strong momentum in the artificial intelligence space.

SoftBank Group shares, which had declined for five straight sessions, rose 19.8% to add about $35 billion to its market-cap Thursday.

The company's fortunes are closely tied to the AI boom through its stake in Arm Holdings, whose chip designs are used in AI servers and data centers powered by Nvidia systems, and its investments in OpenAI.

The Japanese giant has put in more than $30 billion in OpenAI, with its investment gains in the company totaling $45 billion in the year ended March.

SoftBank's sharp rally is being driven by renewed optimism around a potential OpenAI listing, which helped propel Arm Holdings shares up, said Andrew Jackson, head of Japanese equity strategy at Ortus Advisors.

While the developments were largely anticipated by markets, Jackson told CNBC the magnitude of the move was still significant given SoftBank's heavy exposure to AI-related assets. Arm Holdings closed over 15% higher in U.S. trading hours.

SoftBank Group last week posted a $46 billion annual gain at its Vision Fund, driven largely by the soaring valuation of OpenAI as founder Masayoshi Son doubles down on artificial intelligence investments. SoftBank added that gains tied to OpenAI totaled about $45 billion in the fiscal year ended March.

Analysts at Fitch Ratings unit CreditSights last week reiterated an "outperform" recommendation on SoftBank Group debt, adding that a sharp rally in Arm Holdings shares has materially strengthened the conglomerate's balance sheet despite aggressive investments into artificial intelligence.

Asian semiconductor stocks tied to Nvidia's supply chain as well as the broader tech sector also climbed Thursday.

Shares of Taiwan's TSMC rose over 2%. Nvidia relies on TSMC heavily to manufacture its advanced AI processors. Japan's Renesas Electronics, a key Nvidia supplier, rose over 7%.

Japanese semiconductor equipment maker Tokyo Electron, which provides essential chipmaking equipment to foundries that manufacture Nvidia's chip, jumped 5.44%.

SK Hynix, a major provder of high-bandwidth memory chips used by Nvidia, surged more than 8%. Samsung Electronics added 6.7%, also gaining on news that the company and its South Korean labor union reached a tentative pay deal, easing fears of a strike.

Shares of Japanese semiconductor testing equipment maker Advantest rose 2.8%.

Nvidia reported another blockbuster quarter overnight, with revenue surging 85% to $81.62 billion from $44.06 billion a year earlier. The tech giant also unveiled an $80 billion share repurchase program and raised its dividend.

The company's shares, however, were down in after-market trading as CEO Jensen Huang told CNBC's Sara Eisen that the company has "largely conceded" China's artificial intelligence chip market to Huawei. 

— CNBC's Arjun Kharpal contributed to this report.