SoftBank books $7 billion quarterly loss on US data centre hit

TOKYO, Nov 10 : Technology investor SoftBank Group said on Tuesday it booked a net loss of 1.1 trillion yen ($7 billion) in the July-September quarter, hit hard by hefty advance payments it made to support the buildout of data centres in the US.

The result compares with 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 ChatGPT-maker OpenAI.

SoftBank's earnings are volatile and difficult to predict. Forecasts from three analysts polled by LSEG had ranged from a profit of 233 billion yen to a loss of 113 billion yen.

SoftBank said it recorded a $3.7 billion loss due to a subsidiary investing in equipment for AI data centre projects in the US with those plans later revised.

Its financing costs also more than doubled to 462 billion yen in the quarter.

The Japanese firm's big bets on artificial intelligence — particularly the $64.6 billion it has spent on its 13 per cent stake in OpenAI — have raised questions about how well it will be able to weather setbacks currently buffeting the 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.

SoftBank's shares, like other AI stocks, have been hit hard, almost halving in value since the start of June.

The sector was further rocked by the news that the FBI is looking at Jensen Huang, Nvidia's CEO and the face of the AI boom, after his affair with a Chinese businesswoman alleged to be a spy for Beijing. SoftBank was a major investor in the AI chipmaker in the past but no longer holds a stake.

SoftBank's fortunes are increasingly tied to OpenAI and prospects for the wider AI industry as its principal investments span AI model development, data centre infrastructure, semiconductors and robotics.

A public listing for OpenAI would allow SoftBank to monetise its stake but its IPO plans were pushed to next year.

($1 = 157.9700 yen)