SoftBank posts $2.4 billion loss amid growing AI investment concerns

SoftBank just posted a surprise $2.4 billion loss for the third quarter, largely driven by declining valuations at its Vision Fund investment arm. This comes at a time when the company is in talks to invest up to $40 billion in OpenAI, with $15 billion already committed to the Trump-backed Stargate AI project in partnership with Oracle.

SoftBank’s $2.4B Loss Raises Doubts Over AI Investment Strategy

The company reported a surprise loss Wednesday as investments in its Vision Funds took a hit. Revenue also fell short of analyst expectations. The loss is fueling questions about SoftBank’s aggressive push into artificial intelligence, particularly given Vision Fund 2 has lost $22.2 billion since 2019.

The recent loss pales in comparison to SoftBank’s historical losses. In 2023, SoftBank posted a record $32 billion loss at its Vision Fund venture arm, just six months after reporting a $50 billion loss.

By the Numbers

SoftBank’s financial results compared with LSEG SmartEstimate, which weights predictions from analysts with a strong track record, came in as follows:

• Revenue: 1.83 trillion yen vs. 1.84 trillion yen expected
• Net loss: 369.17 billion yen ($2.4 billion) vs. a projected profit of 298.53 billion yen

The Vision Fund segment recorded a loss of 352.75 billion yen for the quarter ending Dec. 31, wiping out gains from the previous two quarters. Factoring in administrative costs and currency fluctuations, the total loss for the Vision Fund segment came to 309.93 billion yen.

Public portfolio companies in Vision Fund 1 saw a 2.1% drop in value, mainly due to a decline in Coupang’s share price. Private investments in the fund lost 3.3% in value. Overall, Vision Fund 1 holdings dropped 2.8% compared to the previous quarter, CNBC reported.

Vision Fund 2’s fair value fell 3.7%, with losses in public investments like EV-maker Ola Electric Mobility and warehouse automation firm AutoStore outweighing a boost from Swiggy’s stock following its November 2024 listing.

Betting Big on AI

SoftBank has poured billions into companies that later struggled or cut their valuations. Now, it’s shifting focus to artificial intelligence, betting on the boom that’s propelled Nvidia and others to massive gains.

The company is close to finalizing a $40 billion primary investment in OpenAI, which would value the AI firm at $260 billion before new funding. If the deal goes through, SoftBank would surpass Microsoft as OpenAI’s largest backer. Private investors last valued OpenAI at $157 billion in October.

SoftBank has already pledged to spend $3 billion per year on OpenAI’s technology. The two companies are launching a joint venture, “SB OpenAI Japan,” which will bring OpenAI’s enterprise tech to major corporations in Japan. The recent success of Chinese AI startup DeepSeek has also raised questions about whether massive AI infrastructure spending is necessary to stay competitive in the AI industry.

As we reported earlier, the DeepSeek V3 model outperformed Meta’s Llama 3.1, OpenAI’s GPT-4o, and Alibaba’s Qwen 2.5 on third-party benchmarks—all at a significantly lower cost.