Data center business to become our largest business, larger than mobile
In the ongoing human effort to build infrastructure for the next era of computing, SoftBank Group offered a rare moment of convergence: its telecommunications arm demonstrated the quiet power of disciplined profitability, while Arm Holdings signaled that the architecture of artificial intelligence is being written in silicon it designs. Together, these developments reminded markets that conglomerates built on patient, long-horizon bets can find their moment when the underlying technologies they backed finally arrive at scale.
- SoftBank shares surged more than 10% as two distinct engines fired at once — a steadied telecom business and a chip designer riding the AI wave.
- Arm Holdings posted record quarterly revenue of $1.242 billion, with data center royalty revenue more than doubling year-on-year, unsettling older assumptions about where the company's growth would come from.
- SoftBank Corp deliberately shed 100,000 smartphone subscribers rather than chase unprofitable growth — a calculated sacrifice that sharpened its earnings profile and lifted full-year guidance.
- Arm's CEO has set a striking target: supply half of all hyperscaler CPUs by year-end, a claim that reframes the company from mobile chip licensor to backbone of AI infrastructure.
- Investor confidence in SoftBank's AI positioning is consolidating, as the telecom unit's upgraded forecasts and Arm's data center momentum together tell a story of a conglomerate arriving at the right moment.
SoftBank Group's stock climbed more than 10% after its telecom subsidiary raised full-year profit targets and Arm Holdings delivered record quarterly results, together reinforcing investor conviction in the conglomerate's technology bets.
The telecom unit's nine-month results through late 2025 showed steady, deliberate progress. Revenue rose 8% to a record 5.2 trillion yen, and operating income climbed an equal 8% to 884 billion yen. SoftBank Corp responded by lifting its full-year revenue guidance to 6.95 trillion yen and its operating income target to 1.02 trillion yen. The company made clear it was prioritizing long-term profitability over subscriber volume — a stance that produced modest consumer revenue growth of 3% but also a loss of 100,000 smartphone customers after tightening acquisition standards.
Arm Holdings provided the sharper catalyst. The British chip designer reported record quarterly revenue of $1.242 billion in the final months of 2025, powered by surging demand for AI infrastructure. Most striking was the data center segment, where royalty revenue more than doubled year-on-year. CEO Rene Haas set an ambitious marker: Arm aims to supply half of the CPUs running the world's largest cloud operators by year-end, and executives expect data centers to surpass mobile as the company's largest revenue source within a few years.
For SoftBank investors, the two stories combined into something larger than either alone — a conglomerate executing across traditional telecom and cutting-edge semiconductors, arriving at a moment when AI infrastructure spending shows no sign of slowing.
SoftBank Group's stock climbed more than 10% in trading after its telecommunications subsidiary announced it was raising profit targets for the full year, while fresh momentum in Arm Holdings—the chip designer in which SoftBank holds a substantial stake—reinforced investor appetite for the conglomerate's artificial intelligence bets.
The telecom unit's nine-month results through the end of 2025 showed steady momentum. Revenue climbed 8% to 5.2 trillion yen, marking a record for that stretch of the fiscal year, while operating income also rose 8% to 884 billion yen. On the strength of that performance, SoftBank Corp lifted its full-year revenue guidance to 6.95 trillion yen from an earlier projection of 6.7 trillion yen. Operating income targets moved higher too, now expected to reach 1.02 trillion yen instead of the prior forecast.
The company framed these results as evidence of disciplined execution, even as it made deliberate shifts in how it approached its consumer business. Rather than chasing subscriber growth at any cost, SoftBank Corp said it was recalibrating to emphasize long-term profitability. That strategy showed in the numbers: consumer revenue inched up just 3%, while segment income grew 6%. The trade-off was visible in subscriber losses—the company shed 100,000 smartphone customers in the third quarter after tightening its customer-acquisition standards.
But the telecom results were only part of what moved the market. Arm Holdings, the British chip designer in which SoftBank holds a major position, delivered its own catalyst. The company reported record quarterly revenue of $1.242 billion in the final three months of 2025, driven overwhelmingly by demand for artificial intelligence infrastructure. Though Arm missed some Wall Street licensing revenue estimates, the overall result beat more selective analyst forecasts that weight the track records of consistently accurate predictors.
Arm's growth story increasingly centers on data centers rather than the smartphones that built its reputation. The company disclosed that data center royalty revenue had more than doubled year-over-year, a trajectory so steep that executives now expect data center business to become Arm's largest revenue source within a few years, surpassing mobile. Rene Haas, Arm's chief executive, outlined an even more ambitious target: the company aims to supply half of the central processing units powering the world's largest cloud computing operators—the hyperscalers—by the end of this year.
For SoftBank Group investors, the combination mattered. Analysts noted that Arm's acceleration, particularly its exposure to the infrastructure buildout supporting artificial intelligence, provided fresh validation for the conglomerate's technology positioning at a moment when AI-related investments continue to command investor attention. The telecom subsidiary's steady earnings lift, paired with Arm's data center momentum, created a narrative of a sprawling company executing across both traditional telecom operations and cutting-edge semiconductor exposure.
Notable Quotes
Our data center royalty revenue has grown more than 100% year-on-year, and we expect in a few years our data center business to be our largest business, larger than mobile.— Rene Haas, CEO of Arm Holdings
The Hearth Conversation Another angle on the story
Why does a telecom company's earnings matter so much to SoftBank Group's stock price? Aren't they separate businesses?
They're technically separate, but SoftBank Group owns the telecom unit, so its profits flow back to the parent company. When the telecom arm raises guidance, it signals the whole group is generating more cash. That matters for dividends and reinvestment.
And Arm? That's the chip company. What's the connection?
SoftBank Group owns a large stake in Arm. So when Arm's stock rises or its business accelerates, SoftBank's investment becomes more valuable. It's like owning shares in a company that owns shares in another company.
The article mentions data center royalties growing over 100%. That's huge. Why is that happening now?
AI infrastructure requires massive computing power. Companies building data centers need chips, and Arm licenses its designs to chip makers. Every time a data center operator buys an AI chip based on Arm's architecture, Arm collects a royalty. That's why the growth is so sharp.
So Arm is betting that data centers will eventually be bigger than smartphones?
Yes. Smartphones made Arm famous, but the smartphone market is mature. Data centers are where the growth is now. If Arm can become the standard architecture for AI chips in data centers the way it dominates mobile, that's a much larger market long-term.
What about SoftBank Corp losing 100,000 subscribers? That sounds like a problem.
It would be, if the company were still chasing growth at all costs. But they're deliberately tightening customer acquisition to focus on profitability instead. Losing low-margin subscribers while keeping high-value ones is actually a sign of discipline, not weakness.