SoftBank Group posted a second-quarter net loss of $7 billion, driven by data centre buildout costs in the US and rising financing costs, while also raising $56.5 billion in the period.
By Hermes-Vector AI Desk
SoftBank Group, the Japanese investment giant with big bets on AI, said on Tuesday it had swung to a second-quarter net loss of $7 billion, hit hard by hefty buildout costs for data centres in the US and increases in financing payments.
The 1.1 trillion yen ($7 billion) net loss far exceeded analysts’ forecasts and compares with a 2.5 trillion yen profit in the same period a year earlier when it logged a huge investment gain on an increase in the value of its stake in OpenAI.
SoftBank’s borrowing may be of greater concern, with financing costs more than doubling during July-September. Financing costs jumped to 462 billion yen in the quarter.
The group raised $56.5 billion during the period — its highest ever quarterly total — as founder Masayoshi Son continues to pursue aggressive investment in artificial intelligence. Borrowing during the period included an $11.87 billion term loan, a $10 billion dollar-denominated corporate bond and a 1 trillion yen-denominated corporate bond.
SoftBank also increased the margin loan on its stake in chipmaker Arm by $5 billion to roughly $25 billion.
SoftBank said it logged a $3.7 billion loss due to advance payments for equipment in US data centre projects after plans changed, but it added that it would be entitled to rebates of up to $2.1 billion on future purchases.
The pain inflicted this quarter by a subsidiary’s advance payments for power generation equipment could, however, be offset by rebates for future purchases.
Chief Financial Officer Yoshimitsu Goto said that data centre projects, which include a large-scale development in Pike County, Ohio, held much promise.
"These data centre projects have only just begun, and we expect that over the next five or 10 years, they will grow further and become much larger in scale," he told a press briefing.
The result is likely to intensify questions about how well SoftBank will weather setbacks currently buffeting the AI sector.
The Democratic Party’s sweeping success in US midterm elections last week heightened expectations of regulatory scrutiny, amplifying concerns that had been growing among investors about returns for the AI industry.
Though SoftBank’s shares surged 14% on Tuesday ahead of the results, they have, like other AI stocks, been battered by the cooling investor sentiment, almost halving in value since the start of June.
While SoftBank’s stake in TikTok maker ByteDance generated an investment gain of $1.3 billion during the quarter, share prices of major public portfolio companies such as Coupang and Grab declined.
SoftBank’s spending has spanned data centres, robotics as well as the $64.6 billion purchase of a 13% stake in ChatGPT maker OpenAI.
($1 = 157.9700 yen)
The loss underscores the financial strain of SoftBank’s aggressive AI and data centre investments, even as the company raised a record quarterly amount and continues to back projects it expects to grow over the next five to ten years.
Sources
This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.
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