SoftBank Reports 1.1 Trillion Yen Loss Amid AI Turmoil

SoftBank Group reported a net loss of 1.1 trillion yen (US$7 billion) for the July-September quarter, a sharp reversal from the 2.5 trillion yen profit recorded during the same period last year. The loss was primarily driven by US$3.7 billion in losses from a subsidiary's investment in US AI data center equipment following revised project plans, alongside financing costs that more than doubled to 462 billion yen.

Financial pressure on the company intensified as the Chinese government blocked SoftBank's $5.4 billion takeover of ABB's robotics unit. This regulatory setback, combined with a rout in AI stocks and a decline in the share price of Arm—which serves as loan collateral—contributed to a 23% year-to-date drop in SoftBank shares. The company's net interest-bearing debt rose to 10.8 trillion yen as of June.

SoftBank's performance remains heavily tied to its US$64.6 billion stake in OpenAI. However, broader market volatility has seen SoftBank shares nearly halve in value since June. This decline coincides with growing investor skepticism regarding AI industry returns and increased expectations of regulatory scrutiny following the US midterm elections, as well as an FBI investigation into Nvidia CEO Jensen Huang.