SoftBank logs $7 billion loss after U.S. data center costs swell

SoftBank Group reported Tuesday its first net loss in almost two years after swallowing a $3.7 billion writedown over a U.S. data-center project amid rising fears around the sustainability of AI growth.

The Tokyo-based backer of OpenAI tumbled to a ¥1.12 trillion ($7.1 billion) loss in its fiscal second quarter around nonrefundable advance payments made to secure equipment and manufacturing capacity for its Ohio data-center campus. Analysts on average expected a profit of ¥129 billion.

Declines in the stock prices of chipmakers Arm Holdings and Intel, as well as South Korean e-commerce giant Coupang, further dragged down SoftBank’s bottom line. The Vision Fund segment, which oversees stakes in hundreds of tech startups, logged a loss of ¥81.6 billion, compared with market expectations for a profit.

SoftBank is increasingly seen as a proxy for sentiment toward OpenAI and the broader AI sector. Its shares have plunged more than 50% from their record high in June, hurt by fears over the debt it’s taken on to finance big AI bets and concerns that the Democratic sweep of U.S. midterm elections could stall many of founder Masayoshi Son’s projects.

Volatility remains high at SoftBank, which held a 13% stake in OpenAI at the beginning of October, with investors eager to gauge the risks and opportunities around its AI investments.

Last week, investors were weighing a valuation as low as $1.1 trillion for Anthropic, down from a previously touted figure of $2 trillion, people familiar with the matter said. OpenAI raised about $11 billion at a $1.25 trillion valuation, after initially seeking $30 billion at a $1.4 trillion value, Bloomberg News reported.

Founder Masayoshi Son’s reliance on debt markets to finance his expanding list of AI investments has made SoftBank’s bonds especially sensitive and lifting its credit default swaps hit their highest in years.