SoftBank's AI Investment Spree to Be in Focus on at Q1 Earnings
Analysts and investors are keen for updates on how they will be financed, the timeline for returns to materialize and whether assets will be sold to fund the new projects.
SoftBank has embarked on its biggest spending spree since the launch of its Vision Funds in 2017 and 2019.
It is leading a $40 billion funding round for ChatGPT maker OpenAI. SoftBank has until the end of the year to fund its $22.5 billion portion, although the remainder has been subscribed, according to a source familiar with the matter.
It is also leading the financing for the Stargate project – a $500 billion scheme to develop data centers in the United States, part of its effort to position itself as the 'organizer of the industry,' founder Masayoshi Son said in June.
SoftBank has yet to release details on what kinds of returns its financing of the Stargate project could generate. The extent of third-party investment will determine what other financing tools, such as bank loans and debt issuance, it may have to deploy.
In July, SoftBank raised $4.8 billion by selling off a portion of its holding in T-Mobile TMUS.O.
'If other sources of capital are less supportive, SoftBank could look to asset-backed finance, which is collateralised by equity in other holdings,' Macquarie analyst Paul Golding said.
The Japanese conglomerate is expected to post a net profit of 127.6 billion yen ($865 million) in the April-June quarter, according to the average estimate of three analysts polled by LSEG.
That would mark SoftBank's second consecutive quarter of profit and follow its first annual profit in four years when it was helped by a strong performance by its telecom holdings and higher valuations for its later-stage startups.
Its results are, however, typically very volatile and difficult to estimate due to manifold investments, many of which are not listed.
SoftBank's performance in exiting from investments and distributing profits has been patchy of late. The Vision Funds had made a cumulative investment loss of $475 million as of end-March.
That said, 13 of 18 analysts have a 'buy' or 'strong buy' rating for SoftBank's stock, according to LSEG.
Although there is some concern in the market that AI-related valuations have become bubbly, they continue to climb.
OpenAI is in early-stage discussions about a stock sale that would allow employees to cash out and could value the company at about $500 billion, according to the source – a huge jump from its current valuation of $300 billion.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Kyodo News
12 minutes ago
- Kyodo News
Japan says no rift with U.S. on reciprocal tariff deal
TOKYO - Japan said Thursday it has confirmed with the United States that there is no discrepancy in their understanding of a bilateral agreement on U.S. imposition of a "reciprocal" tariff, despite concerns the two sides may not be aligned ahead of the implementation the same day of the 15 percent levy. Chief Cabinet Secretary Yoshimasa Hayashi reiterated that goods to be shipped to the United States from Japan facing tariffs of less than 15 percent will be subject to a uniform 15 percent duty, while levies on those with higher rates will remain unchanged. An executive order signed earlier by U.S. President Donald Trump made no mention of this point and a White House official said Wednesday that Japanese imports taxed at 15 percent or higher will still face an additional 15 percent rate. "We have confirmed that there is no discrepancy," Hayashi told a press conference. The top government spokesman said Japan's chief negotiator Ryosei Akazawa, who is on a visit to Washington, has checked with the U.S. side the details of the bilateral agreement over the reciprocal duty and urged Washington to take measures immediately to implement it. "We will continue to communicate with the United States at various levels to make sure that the agreement is firmly in place," Hayashi said. Based on the bilateral deal, the United States is expected to lower auto tariffs on Japanese cars. But skeptics in Japan say uncertainty remains over when and if the reduction from the current 27.5 percent can be realized without a written agreement.
Yomiuri Shimbun
12 minutes ago
- Yomiuri Shimbun
Japan to Export Frigates to Australia: Use Joint Development to Strengthen Foundations of Defense Industry
The high-tech capabilities of a Japanese frigate, equipped with a variety of functions such as anti-ship and antiaircraft capabilities and operable by a small number of personnel, seem to have been appreciated. It is hoped that the first joint defense development project between Japan and Australia will be utilized to strengthen systems for safeguarding maritime security and foster the defense industry. The Australian government has announced that it will accept Japan's proposal regarding a new model of frigates that the Australian navy plans to introduce. The two countries will jointly develop a vessel with enhanced capabilities based on the Mogami-class frigate manufactured by Mitsubishi Heavy Industries, Ltd. for the Maritime Self-Defense Force. Australia plans to introduce 11 vessels with a 2030 start of operations in mind. The first three vessels will be built in Japan before construction is transferred to Australia for the remaining eight vessels. Australia narrowed down its candidates to Japanese and German manufacturers in autumn last year and since then has held discussions on which to choose. Australia ultimately chose Japan's proposal because it attached importance to such points as Japan's model being operable with a crew of 90, about half the number required for comparable conventional vessels, mainly thanks to the digitalization of instruments. The Australian military is reportedly facing a serious shortage of personnel. Australia is rushing to enhance its naval capabilities due to a sense of caution about China. In February, the Chinese military conducted live-fire training exercises in waters near Australia. China is also deepening security cooperation with Pacific island nations. The waters connecting Japan and Australia are important maritime transport routes for both countries. The waters around the small island nations can be said to be a strategically important area for Australia. China's behavior, as if it is trying to bring these waters under its influence, is unacceptable. The MSDF also plans to eventually have a total of 24 Mogami-class frigates. Use of the same vessels by Japan and Australia and improvement of mutual operational capabilities will effectively help deter China's activities. There remain issues to be resolved in the joint development plan. Australia is said to want to equip its new frigates with U.S.-made cruise missiles. This will require construction in which the hulls are modified. The Japanese side also will need to smoothly transfer technology to Australian engineers. Japan must make steady preparations for a formal contract to be concluded early next year. This is the first time Japan will export large-scale military equipment. For this reason, some may view this as a shift in the nation's postwar arms export policy, but that view is mistaken. In 1976, the Cabinet of then Prime Minister Takeo Miki decided on a de facto total ban on arms exports. Before then, Japan allowed exports in a limited manner under the Three Principles on Arms Exports established in 1967, which prohibited exports to countries such as those involved in conflicts. In 2014, the government established the Three Principles on Transfer of Defense Equipment and Technology, marking a shift toward exports with certain conditions. With an increasingly severe security environment, this is an era when it has become necessary to jointly develop equipment and deepen defense cooperation with friendly countries. (From The Yomiuri Shimbun, Aug. 7, 2025)
Asahi Shimbun
an hour ago
- Asahi Shimbun
U.S. denies tariff exemption for Japan, at odds with Tokyo
U.S. President Donald Trump, left, signs a cap for Ryosei Akazawa, the minister of economic revitalization, in a meeting at the White House on April 16. (Provided by the White House) WASHINGTON—The Trump administration imposed an additional 15 percent tariff on all Japanese imports on Aug. 7, denying an exemption that the Japanese government has said would apply to certain products. In a federal register dated Aug. 6, Washington listed what it calls modified reciprocal tariff rates for U.S. trading partners, showing that a 15-percent levy will be tacked onto existing tariff rates on all items from Japan. A White House official told The Asahi Shimbun on Aug. 6 that the deal that was agreed to with Japan is a 15-percent reciprocal tariff. 'That is on top of any pre-existing MFNs,' the official said, referring to the most favored nation tariff rates, or normal non-discriminatory tariff rates charged on imports from other World Trade Organization members. Japan has explained that its trade deal with the United States will exempt Japanese goods from the new reciprocal tariff if the existing tariff rates are 15 percent or higher. The uniform 15-percent reciprocal tariff will apply to all other goods that are subject to tariffs under 15 percent, officials said. The federal register showed that the exemption for goods with the existing tariff rates of 15 percent or higher will be granted only to the European Union. The new reciprocal tariffs took effect at 1:01 p.m. on Aug. 7 Japan time. Until now, the United States has levied a 10-percent reciprocal tariff on almost all trading partners, including Japan. Ryosei Akazawa, Japan's chief trade negotiator, met with U.S. Commerce Secretary Howard Lutnick, one of his U.S. counterparts, for 90 minutes on Aug. 6 in the United States. Akazawa, minister in charge of economic revitalization, called on Lutnick to confirm the terms of the Japan-U.S. agreement on the reciprocal tariff again and implement them immediately, according to the Japanese government. It was unclear how Lutnick responded.
