Japanese conglomerate SoftBank reported a net loss of 1.12 trillion yen, or $7 billion, during the second quarter of its financial year, marking its first net loss in approximately two years.
The figure represents a sharp downturn from the 2.5 trillion yen profit recorded during the same period of the previous year, which had been bolstered by investment gains from the rising value of the company’s stake in ChatGPT developer OpenAI. Market expectations had anticipated a profit of 129 billion yen, based on the average estimates of eight analysts.
Despite the steep quarterly loss, the company’s revenues outperformed market forecasts, reaching 2.22 trillion yen, or $14 billion, compared with anticipated revenues of 2.02 trillion yen. Furthermore, SoftBank’s stock closed higher in Tokyo trading, rising 13.9% amid broader gains across major Asian technology equities, and climbed 13.88% in subsequent trading following announcements regarding infrastructure plans in Malaysia.
The financial strain on SoftBank stemmed largely from falling share prices across several key listed holdings, including chipmakers Arm Holdings and Intel, alongside South Korean e-commerce firm Coupang. The Vision Fund unit, which manages investments in hundreds of technology startups, posted a loss of 81.6 billion yen.
The company also absorbed a $3.7 billion loss resulting from a subsidiary’s investment in equipment intended for US artificial intelligence data center projects that were subsequently modified.
Funding costs more than doubled during the quarter to reach 462 billion yen, or approximately $3 billion, as founder Masayoshi Son’s group increased its reliance on debt markets to back its expanding artificial intelligence strategy. SoftBank previously completed a total investment of $64.6 billion to secure a 13% stake in OpenAI.
The heavy deployment of capital into artificial intelligence ventures has heightened investor scrutiny regarding returns and debt levels. Credit default swaps for SoftBank reached multi-year highs amid concerns over borrowing and financial exposure. Market observers are also weighing potential regulatory shifts following the Democratic Party’s advances in US midterm elections, which could impact the group’s ongoing projects.
