SoftBank recorded a loss of $2.4 billion in the third quarter, driven primarily by a decline in valuation at the Vision Fund Investment Arm. This is when the company is in talks to invest up to $40 billion in Openai, with $15 billion already committed to the Trump-backed Stargate AI project.
Softbank’s $2.4 billion loss raises questions about AI investment strategy
The company reported a surprising loss on Wednesday as its investment in the Vision Fund became a hit. Additionally, revenues did not meet analyst expectations. The losses reinforce Softbank’s questions about an aggressive push to artificial intelligence, especially considering Vision Fund 2 has lost $22.2 billion since 2019.
Recent losses pale in comparison to Softbank’s historical losses. In 2023, SoftBank recorded a record $32 billion loss to the Vision Fund Venture Arm, just six months after reporting a loss of $50 billion.
By numbers
SoftBank’s financial results compared to LSEG Smarttestimate, which weights strong-performing forecasts from Analyts:
Revenue: 1.83 trillion yen vs. 1.84 trillion yen expected net loss: 36.917 billion yen ($2.4 billion) vs. 29.853 billion yen
The Vision Fund segment recorded a loss of 35.275 billion yen in the quarter ending December 31st, wiping out profits from the previous two quarters. Taking into account management costs and currency fluctuations, the total loss in the Vision Fund segment reached 399.3 billion yen.
Vision Fund 1 public portfolio companies have lost 2.1% value, primarily due to a decline in Coupang’s stock price. Private investments in the fund lost 3.3% in value. Overall, Vision Fund 1 Holdings fell 2.8% compared to the previous quarter, CNBC reported.
Vision Fund 2’s fair value fell 3.7%, with losses from public investments such as EV maker Ola Electric Mobility and Warehouse Automation Firm’s Autostore surpassing Swiggy’s stock boost following the November 2024 list. Ta.
Big bet on AI
SoftBank poured billions into companies that later struggled or cut valuations. Now it shifts its focus to artificial intelligence and bets on the boom that will win a massive amount of nvidia and others.
The AI company is valued at $260 billion of new capital as the company is finalising its $40 billion major investment in Openai. If a transaction is made, SoftBank surpasses Microsoft as Openai’s biggest backer. Private investors last valued Openai at $157 billion in October.
SoftBank has already committed to spending $3 billion a year on Openai’s technology. The two companies have launched SB Openai Japan, a joint venture that brings Openai’s Enterprise Tech to large Japanese companies. The recent success of Chinese AI startup DeepSeek also raised questions about whether large-scale AI infrastructure spending is necessary to remain competitive in the AI industry.
As reported previously, the Deepseek V3 model outperformed Meta’s Llama 3.1, Openai’s GPT-4O, and Alibaba’s Qwen 2.5 on third-party benchmarks.
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