SoftBank Swings to $7.1 Billion Loss as AI Spending Fears Bite
SoftBank posted a $7.1 billion loss, its first in nearly two years, as a $3.7 billion US data-centre writedown and sliding AI stocks hit its portfolio.
Image: Wikimedia Commons / nobihaya
TOKYO, Nov 10 — SoftBank Group swung to a ¥1.12 trillion ($7.1 billion) net loss in the three months to September 30, its first quarterly loss in almost two years, after a $3.7 billion writedown on a US data-centre project and a slide in the value of its technology holdings, according to the company's earnings statement released on Tuesday.
The result reversed a ¥2.5 trillion profit in the same quarter a year earlier and fell far short of market expectations: analysts had forecast a profit of about ¥129 billion. Revenue rose 16 percent to ¥2.22 trillion, up from ¥1.9 trillion a year earlier, as the group's telecoms and chip operations kept growing while its investment portfolio shrank.
Key Takeaways
- SoftBank posted a ¥1.12 trillion ($7.1 billion) net loss for the quarter ended September 30, against a ¥2.5 trillion profit a year earlier.
- A $3.7 billion writedown covered non-refundable advance payments for equipment and power-generation capacity at a US data-centre campus in Ohio.
- Analysts had expected a ¥129 billion profit; SoftBank shares have fallen more than 50 percent from their record high in June.
The writedown sits at the centre of the loss. SoftBank took a $3.7 billion charge after paying in advance for equipment and power-generation capacity for US data centres, including a campus in Ohio, and then revising its plans. The payments were non-refundable, so the money could not be recovered. The charge captures a wider worry: the AI building rush may be running ahead of returns.
The group's Vision Fund segment, which holds stakes in hundreds of technology startups, also lost ground. Shares in chipmaker Arm Holdings, Intel and South Korean e-commerce group Coupang all fell during the quarter, cutting the value of SoftBank's holdings. The funds have long driven SoftBank's biggest swings: the same portfolio produced a ¥2.5 trillion profit a year earlier.
SoftBank, founded by Masayoshi Son, is a leading technology investor and a leading backer of OpenAI. Its shares have fallen more than 50 percent from their June record high as doubts about AI valuations have spread.
The loss comes a day after Wall Street staged its strongest rally since April, with the S&P 500 up 2.35 percent, the Nasdaq Composite up 2.74 percent and the Dow up 2.15 percent. Lenders have grown wary of financing AI infrastructure, while several Wall Street brokerages have called the sell-off overdone. The rebound has not settled the debate over AI valuations.
The Bank of England's governor, Andrew Bailey, warned on Monday that an AI asset price bubble poses clear risks to financial stability. Bailey said investors may overstate the returns from AI, or expect them sooner than they arrive. "Bubble spotting is an imprecise science," he said.
Competition in the hardware behind AI is also intensifying. Google has unveiled new AI chips aimed directly at Nvidia's dominance, giving customers a cheaper path to training and running AI models. Cheaper chips could ease cost pressure on data-centre builders.
SoftBank fiscal second quarter at a glance
| Measure | Figure |
|---|---|
| Net loss | ¥1.12 trillion ($7.1 billion) |
| Profit a year earlier | ¥2.5 trillion |
| Analysts expected | ¥129 billion profit |
| Revenue | ¥2.22 trillion, up 16 percent |
| US data-centre writedown | $3.7 billion |
| Share price vs June record high | Down more than 50 percent |
Frequently Asked Questions
How large was SoftBank's quarterly loss?
SoftBank reported a net loss of ¥1.12 trillion, about $7.1 billion, for the three months ended September 30. It was the group's first quarterly loss in almost two years, reversing a ¥2.5 trillion profit a year earlier.
What caused the $3.7 billion writedown?
SoftBank made non-refundable advance payments for equipment and power-generation capacity for data-centre projects in the United States, including a campus in Ohio, and later revised its plans. The writedown records the cost of payments that could not be recovered.
Why did SoftBank's investments fall in value?
Shares in several of its largest holdings, including chipmaker Arm Holdings, Intel and South Korean e-commerce group Coupang, declined as investors questioned AI valuations.
What should investors watch next?
The US Bureau of Labor Statistics releases October consumer-price data on Tuesday, the last inflation report before the Federal Reserve meets on December 9. SoftBank reports fiscal third-quarter results in February 2027.
The October inflation report lands at 8:30 a.m. Eastern time on Tuesday. For SoftBank, the next test comes in February 2027, when it reports fiscal third-quarter results.
