As SoftBank Group prepares to announce its earnings on Thursday, its substantial investments in artificial intelligence companies are expected to dominate discussions. Investors and analysts are eager for clarity on how these investments will be financed, the timeline for returns, and whether SoftBank will sell assets to support these projects.
SoftBank has embarked on its most ambitious spending spree since launching its Vision Funds in 2017 and 2019. Notably, the company is leading a $40 billion funding round for OpenAI, the creator of ChatGPT. SoftBank is committed to funding its $22.5 billion portion by year-end, with the remaining capital already subscribed, according to a source familiar with the matter.
In addition, SoftBank is spearheading financing for the Stargate project, a massive $500 billion initiative aimed at developing data centers across the United States. This effort aligns with founder Masayoshi Son’s vision of positioning SoftBank as the “organiser of the industry.” However, details on the expected returns from Stargate remain unclear, with the level of third-party investment likely to influence whether SoftBank needs to rely on additional financing methods such as bank loans or debt issuance.
In July, SoftBank raised $4.8 billion by selling part of its stake in T-Mobile. “If other sources of capital are less supportive, SoftBank could look to asset-backed finance, which is collateralised by equity in other holdings,” noted Macquarie analyst Paul Golding.
For the April-June quarter, SoftBank is forecasted to post a net profit of 127.6 billion yen ($865 million), according to three analysts surveyed by LSEG. This would mark its second consecutive profitable quarter and follow its first annual profit in four years, supported by strong telecom operations and improved valuations of later-stage startups.
Still, SoftBank’s earnings remain highly volatile and difficult to predict due to the complex mix of investments, many of which are private. The Vision Funds reported a cumulative investment loss of $475 million as of March’s end. Despite some concerns about inflated AI valuations, market confidence persists, with 13 of 18 analysts rating SoftBank stock as a “buy” or “strong buy.”
Meanwhile, OpenAI is reportedly in early talks about a stock sale that would allow employees to cash out, potentially valuing the company at $500 billion — a significant rise from its current $300 billion valuation.
