SoftBank Group has reported its first quarterly net loss in almost two years. The Japanese investment giant took a heavy charge on US data center projects and paid far more to borrow money for its artificial intelligence bets.
The Tokyo-based company reported a net loss of about 1.12 trillion yen, or roughly $7 billion, for the three months to September. That compares with a profit of 2.5 trillion yen a year earlier, when a surge in the value of its holdings lifted results. Analysts had expected a profit of about 129 billion yen.
The write-down
The biggest single factor was a $3.7 billion loss tied to advance payments for power-generation equipment for US data centers, including a large project in Pike County, Ohio. SoftBank had rushed to reserve manufacturing capacity because competition for energy supply and equipment was intense. Chief financial officer Yoshimitsu Goto told reporters that some purchases were made before long-term specifications were finalised.
After plans changed, the payments became non-refundable in part, though the company said it expects to be entitled to rebates on some of the amounts. Goto said SoftBank has decided to carry out a thorough reassessment of its procurement strategy.
Other pressure points
Financing costs rose sharply, reaching 462 billion yen in the quarter, more than double the previous year’s level, according to reports. SoftBank raised a record $56.5 billion during the period. Much of the money supports the company’s AI strategy, including the $64.6 billion purchase of a 13 percent stake in OpenAI and the acquisition of data center operator DigitalBridge Group.
The Vision Fund, which holds stakes in hundreds of technology start-ups, posted a loss of 81.6 billion yen, when the market had expected a profit. A decline in the value of SoftBank’s Intel holding also weighed on results.
There were bright spots. Revenue came in at 2.22 trillion yen, above the 2.02 trillion yen analysts had forecast. The company’s stake in TikTok owner ByteDance generated an investment gain of about $1.3 billion. Nvidia has also committed to invest $3 billion in SB Energy, SoftBank’s data center development subsidiary, which aims to go public.
A debt question
The results sharpened questions about how much leverage the group can carry. Founder Masayoshi Son has leaned heavily on debt markets to fund his ambitions, and reports say the cost of insuring SoftBank’s debt against default recently reached its highest in years.
SoftBank said a valuation update on its OpenAI holding could come in its fiscal third quarter. That could lift its net asset value, though the company has not said by how much.
Why shares rose anyway
Despite the loss, SoftBank shares closed 13.9 percent higher on Tuesday, according to CNBC, as Asian technology stocks rebounded broadly after last week’s sell-off. The move shows that investors are focusing on the stock’s sensitivity to the AI trade more than any single quarter’s result.
That sensitivity cuts both ways. The same sentiment that lifted the shares on Tuesday can reverse quickly if AI-related stocks weaken again.
The wider lesson
SoftBank’s quarter highlights a theme running through the technology sector this week. Demand for AI infrastructure remains strong, but paying for it is increasingly expensive. Cloud provider CoreWeave reported record backlog on Tuesday while carrying nearly $47 billion in debt. Anthropic is preparing a stock market debut. Rising interest rates mean the cost of capital now matters as much as the size of the opportunity.
For SoftBank, the next few quarters will test whether its data center spending, OpenAI stake and borrowing can produce returns that justify the financing bill.
This article is for information only and is not investment advice. Currency conversions are approximate.
