SoftBank Group reported a substantial loss of 369.16 billion yen for Q3 of fiscal year 2024-2025, primarily due to underperforming investments in its Vision Fund division. Despite this setback, the company is advancing its Stargate project, aimed at developing AI infrastructure in the U.S. with a projected $500 billion investment. Challenges regarding funding have arisen, particularly concerning its stake in Arm Holdings, amidst scrutiny from figures like Elon Musk regarding the project’s financial viability.
SoftBank Group Reports Significant Loss Amid AI Investment Strategy
In a recent announcement, SoftBank Group, the Japanese powerhouse in technology investments, revealed a staggering loss for the third quarter of its fiscal year 2024-2025. The company, known for its ambitious projects, including a collaboration with OpenAI on the Stargate initiative, reported a net loss of 369.16 billion yen (approximately 2.3 billion euros) from October to December. This figure is more than double the losses anticipated by analysts and stands in stark contrast to the net profit of 950 billion yen achieved during the same timeframe last year.
The primary contributor to this downturn has been the underperformance of its Vision Fund division, which includes investments from both Vision Fund 1 and 2. Collectively, these funds faced a hefty loss of 310 billion yen. Major investments, including those in South Korean e-commerce leader Coupang and Chinese ride-hailing giant Didi Chuxing, have seen substantial declines in value. Additionally, the adverse effects of a weakening yen have further hampered the profitability of SoftBank’s investments.
Transitioning to AI Infrastructure
Despite these turbulent results, SoftBank continues to push forward with its innovative initiatives, including the Stargate project aimed at developing artificial intelligence infrastructure in the United States. This ambitious venture is set to mobilize at least $500 billion over the next four years, with an initial investment of $100 billion. Throughout this challenging period, SoftBank managed to achieve a revenue of 1832 billion yen (around 11.5 billion euros) in the third quarter, aligning with market expectations and reflecting a 3.3% increase year-on-year.
SoftBank’s strategic shift towards AI marks a significant change in its business model after years of substantial investments across various tech sectors. This pivot is largely influenced by the successful IPO of Arm Holdings in New York, a leading microprocessor architecture firm in which SoftBank is the main shareholder. The Stargate initiative, in collaboration with OpenAI, aims to establish data hosting and processing centers, vital for the growing AI landscape in the U.S.
However, challenges loom over the funding of this expansive initiative. Elon Musk, the CEO of Tesla and recently appointed by Donald Trump to oversee an extra-governmental mission, openly questioned the financial viability of Stargate on social media. In response, Sam Altman, the CEO of OpenAI, refuted Musk’s claims. Analysts have speculated that SoftBank may have to reconsider its stake in Arm to secure necessary funding for Stargate, which could potentially reduce the required capital commitment and lessen the need to liquidate assets to finance the project.