SoftBank’s $2.4 Billion Loss and Its $500 Billion AI Gamble

SoftBank’s $2.4 Billion Quarterly Loss: A Warning Sign or a Strategic Reset?

SoftBank’s Q3 Report: A Harsh Reality Check
SoftBank Group, once a titan of aggressive tech investing, reported a staggering net loss of ¥369.2 billion ($2.4 billion) for the fiscal third quarter ending December 31, 2024. This stark contrast to the ¥950 billion profit it posted a year earlier underscores a volatile investment strategy that has yet to yield consistent returns.

At the core of this financial setback is SoftBank’s Vision Fund, which alone posted a ¥309.9 billion loss in the quarter. The underperformance of public holdings, including Coupang and Didi Global, has weighed heavily on the company’s balance sheet. For investors, this represents yet another reminder of the inherent risks of SoftBank’s high-stakes approach to tech investments.

The Vision Fund’s Ongoing Struggle

Since its inception, SoftBank’s Vision Fund has been a symbol of bold, aggressive tech investing, betting on high-growth startups in sectors ranging from e-commerce to artificial intelligence. However, recent years have been marked by a series of painful miscalculations—most notably, the WeWork fiasco.

The problem is not just short-term volatility; there is a deeper structural issue in SoftBank’s investment model. The Vision Fund has continually struggled with valuation declines, making it increasingly difficult for the company to maintain profitability. Repeated losses raise concerns about the fund’s ability to deliver sustainable returns. The public market’s reaction has been mixed—while some still believe in Masayoshi Son’s long-term vision, others question whether SoftBank can truly navigate the turbulent waters of tech investing without significant recalibration.

A $500 Billion AI Gamble Amid Financial Uncertainty

Despite this loss, SoftBank remains undeterred, doubling down on its AI ambitions. The company is currently exploring ways to raise $500 billion for its ambitious Stargate AI project, a collaboration with OpenAI aimed at building advanced AI infrastructure. One financing scenario under consideration includes raising 10% through equity and up to 70% through senior loans—a move that some analysts see as a high-risk gamble given SoftBank’s current liquidity constraints.

In parallel, SoftBank is reportedly finalizing a $40 billion investment in OpenAI, a deal that would elevate OpenAI’s valuation to approximately $300 billion and make SoftBank its largest investor—surpassing Microsoft. This would place SoftBank at the center of the rapidly evolving AI sector, a shift that could either prove to be a masterstroke or another financial misstep.

Can AI Save SoftBank? Investor Sentiment is Divided

SoftBank’s pivot toward AI has sparked a divisive debate among investors and analysts. Some view it as a bold recalibration, necessary to secure long-term growth in an industry that is expected to explode over the next decade. Others see it as an act of desperation, an attempt to cover up the deep flaws in SoftBank’s past investment strategies.

Key concerns among investors include:

• Debt Exposure: SoftBank’s plan to raise billions for AI investments while still managing losses from its Vision Fund raises questions about whether its borrowing strategy is sustainable.
• Market Timing Risks: AI may be the future, but entering the sector at a sky-high valuation could backfire if the AI bubble deflates.
• Execution Challenges: Even if AI investments pay off in the long run, SoftBank’s ability to successfully manage such large-scale projects remains unproven.

Masayoshi Son’s High-Stakes Bet

SoftBank’s founder and CEO, Masayoshi Son, has always been a visionary. He has previously demonstrated an uncanny ability to identify emerging trends—Alibaba being one of his greatest success stories. However, his recent track record has been far more volatile. Son has repeatedly assured investors that AI is the “biggest revolution in human history”, and that SoftBank is positioning itself at the forefront of this transformation.

The company’s participation in high-profile AI discussions, including Son’s joint appearance with OpenAI’s Sam Altman at a White House event in January 2025, signals that SoftBank intends to be a major player in shaping the industry. But the critical question remains: Can SoftBank afford to take on this level of financial risk?

Looking Ahead: A Risky Road to Recovery

SoftBank’s third-quarter losses expose fundamental flaws in its investment strategy—flaws that have persisted despite repeated promises of improvement. Its pivot to AI may provide a path to recovery, but only if executed with greater discipline and strategic foresight.

For now, investors remain cautious. While some see this as an inflection point that could propel SoftBank into a new era of AI dominance, others fear that the company is once again overextending itself. The coming quarters will be critical in determining whether SoftBank can reverse its financial misfortunes or if it is destined to repeat the mistakes of the past.

The stakes have never been higher. Will SoftBank’s AI gamble pay off, or will it become another chapter in a series of costly missteps? Investors and the tech industry alike are watching closely.