China’s military parade on Wednesday – featuring the latest AI-powered uncrewed vehicles, laser weapons and missiles – signalled an arms race fuelled by scientific and technological advances.

Artificial intelligence, optics and physics and information technologies have underscored how innovations will shape the future of modern warfare, paving the way for futuristic intelligent systems.

“The parade featured unmanned intelligent systems, underwater combat units, cyber and electronic forces and hypersonic weapons, highlighting the growing capacity of the People’s Liberation Army (PLA) to harness emerging technologies, adapt to the evolving character of warfare, and prevail in future conflicts,” state broadcaster CCTV said.

The weapons on parade featured a “high level of informatisation, intelligence and practical combat capability, showcasing the military’s combat abilities, capabilities in new domains and strong strategic deterrence”, Dong Yongzai, a researcher at a centre under Beijing’s Academy of Military Science, told CCTV.

AI-powered equipment and vehicles

The parade showcased a variety of AI-powered uncrewed equipment.

The land combat formation showed vehicles that can perform reconnaissance, assaults, mine and bomb defusing and squad support, according to CCTV.

SoftBank Group has been among the top performers on Tokyo’s Prime market this year, surging on the back of a US tech rally powered by an artificial intelligence boom.

The conglomerate’s increasing AI investments have fueled hopes for lucrative returns, but some investors are still mulling whether it’s worth the bet.

Shares in SoftBank are up more than half this year, gaining steam over the last few months and outperforming the benchmark Nikkei Stock Average’s 8.5% gain. SoftBank touched an all-time closing high of JPY 16,705 (USD 113) on Aug. 18, helping push the Nikkei average to a record high last month, before tumbling to the 14,000 level.

Tomoichiro Kubota, a senior market analyst at Matsui Securities in Tokyo, said the stock’s more recent weakness reflected concerns among retail investors that its rally was due for a pause.

“SoftBank’s share price doubled in a short period of time as expectations and hopes for its future growth climbed very quickly,” he said. “Long-term institutional investors operate differently, but for Japanese retail investors, it was an opportunity to short-sell the stock amid the rapid rise.”

The stock had been buoyed by a string of announcements and news headlines.

Just days after the Japanese giant revealed that it would invest USD 2 billion in Intel and acquire a stake of around 2%, President Donald Trump said the US government will take a roughly 10% stake in the chipmaker in exchange for outstanding federal grants.

“Semiconductors are the foundation of every industry,” Masayoshi Son, the chairman and CEO of SoftBank, said in a statement on August 26. The “strategic investment” in Intel “reflects our belief that advanced semiconductor manufacturing and supply will further expand in the US, with Intel playing a critical role.”

Intel is just one of SoftBank’s many bets on AI and semiconductors, as the company has accelerated investments in such advanced technologies.

UK-based chip designer Arm, which SoftBank bought in 2016 for USD 31 billion, is reportedly considering developing AI chips under its own brand. In the past year or so, SoftBank has acquired AI chipmaker Graphcore and US chip designer startup Ampere Computing. The Japanese company has increased its stake in Nvidia, as well as the world’s top chip foundry, Taiwan Semiconductor Manufacturing Company (TSMC).

In March, ChatGPT creator OpenAI announced that it secured fresh funding of USD 40 billion from investors, including USD 30 billion from SoftBank. OpenAI is reportedly preparing to sell around USD 6 billion in stock to investors, including SoftBank, as part of a secondary sale that would value the company at roughly USD 500 billion.

“These investments are further emphasis of a longer-term theme, in our view, involving SoftBank Group focusing on AI ecosystem plays, as opposed to technology more broadly, or other verticals like consumer, as we have seen in the past,” said Paul Golding, a senior digital infrastructure and payments analyst at Macquarie in New York.

Golding added that SoftBank has been using its non-AI investments “as funding sources for reinvestment into what we would consider to be more pure play AI investments.”

SoftBank’s Son has taken a key role in Trump’s AI push. Trump said in January that OpenAI, Oracle, and SoftBank pledged USD 500 billion to the Stargate project to build data centers across the US.

“The perception of SoftBank has changed significantly. Investors now see SoftBank as an AI company rather than an investment company,” said Takashi Nakagawa, senior analyst at Tokai Tokyo Intelligence Laboratory.

At the company’s annual general meeting in June, Son told shareholders that in ten years, his company aims to become the world’s leading platform provider for artificial superintelligence (ASI), leveraging the strengths of Arm and OpenAI.

The tycoon said that just like Google, Apple, Microsoft, Amazon, and Meta have defined the digital age, he wishes for SoftBank to become the foundational company in ASI.

Earlier this month, the company reported a JPY 421.8 billion (USD 2.9 billion) net profit for the three months ended in June, posting its first profit for that quarter in four years, as valuations in its Vision Funds’ portfolio improved. Gains in shares of South Korean online retailer Coupang and ride-hailing firm Grab helped the tech investment arm, as did a rise in Nvidia’s stock price.

SoftBank’s net asset value (asset value minus liabilities), which shows how well the company is doing with its investments, jumped 26% to JPY 32.4 trillion (USD 222.8 billion) as of June from three months before. The increase was largely due to a rise in the market capitalization of Arm, which accounts for half of the value of the stocks it holds.

Oliver Matthew, head of Asia consumer research at CLSA, said, “I think SoftBank has consistently shown that they get the paradigm shifts in technology correct, and they make big investments in those shifts.”

Matthew said SoftBank has been “extremely successful” with its bets on Arm and the US carrier Sprint, both of which initially received a “quite negative” response from investors. “But they turned out to be brilliant investments over the longer-term horizon.”

Along with expectations for SoftBank’s future growth, also at play are investors eager to gain access to OpenAI.

OpenAI is a private company that was founded in 2015 as a nonprofit, open-source model. But it has a for-profit division and scrapped plans to convert entirely into a for-profit business.

“When I talk to investors, [SoftBank’s] rally seems to be driven by a belief that, for institutional investors who cannot directly invest in OpenAI, one way for them to invest is through buying SoftBank’s public equity stock,” said Atul Goyal, equity analyst at Jefferies in Singapore who has been covering Asia’s tech, media, and telecommunication sectors for around two decades.

Goyal said that whether investments in OpenAI will pay off depends on whether the company can convert itself into a for-profit business. SoftBank has said it could reduce the size of its funding to OpenAI if it fails in its transition this year.

Some analysts have flagged concerns and potential risks for the Japanese tech giant stemming from its increasing exposure to AI.

A recent report by the Massachusetts Institute of Technology revealed a cold truth for companies betting on AI. While US businesses have invested between USD 35 billion to USD 40 billion in generative AI, it said that a whopping 95% of businesses are “getting zero return” on their investments.

Based on the valuations OpenAI has been given by investors, the startup “is an extremely valuable business now,” said Dan Baker, senior equity analyst at Morningstar in Australia. “But no one’s really sure about how exactly they’re going to make money.”

SoftBank’s involvement in cutting-edge technologies and advanced businesses comes with “more risks on the equity value,” Baker said. Such investments may not bear fruit for some time, he said. “I guess that’s what Son has done in the past. He’s taken those sorts of risks.”

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.