SoftBank posts unexpected $7bn loss as AI bet sours
First quarterly loss in nearly two years comes as share price has fallen by half
Softbank Group reported an unexpected loss of $7.09 billion in the second fiscal quarter due to a major loss in its global technology portfolio, which was hit by a significant decline in AI-related valuations. The company's net loss attributable to shareholders was 1.12 trillion yen for the three months ending on September 30, contrary to expectations of a profit of 129.32 billion yen and last year's profit of 2.50 trillion yen.
Softbank's woes were amplified by disruptions in U.S. data center construction, resulting in a 597.25 billion yen loss over the six months to September 30, primarily due to impairments on power generation equipment procurement. The company incurred an investment loss of 303.88 billion yen, while its flagship Vision funds generated a profit of 245.5 billion yen.
Additionally, financing costs surged to 461.9 billion yen in the quarter, driven by a margin loan backed by Softbank's Arm holdings, substantial bond issuances, and higher funding rates. Shares of the Japanese conglomerate have plummeted by over a quarter of their value within a month, with investors increasingly concerned about the impact of AI and U.S. data center expansion on its portfolio.
The British chip designer Arm, a key asset in Softbank's holdings, witnessed a sharp decline in share price due to worries about a potential slowdown in AI demand.
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