SoftBank swings to surprise $7bn loss on US data centre writedown

(Sharecast News) - Japanese technology investor SoftBank Group swung to an unexpected JPY1.115trn ($7.06bn) quarterly loss in the second quarter after taking a substantial hit from its investments in US artificial intelligence data centre projects, although shares rallied sharply following recent heavy falls.

The net loss attributable to shareholders for the three months to 30 September compared with a JPY2.502trn profit a year earlier, when earnings were boosted by gains on its investment in ChatGPT developer OpenAI.

Despite the disappointing results, SoftBank shares surged 13.9% to JPY3,872 in Tokyo, rebounding after a sharp sell-off in recent months amid mounting concerns over valuations and the sustainability of AI investment.

The company recorded a JPY597.2bn ($3.73bn) charge after revising procurement plans for power generation equipment intended for US AI data centres, including a major development in Ohio.

SoftBank said the charge included JPY457bn in non-refundable advance payments for manufacturing capacity and equipment, alongside JPY140.2bn in contract modifications and settlements.

The changes followed evolving requirements for existing and planned projects, although the company said it could receive rebates of up to $2.1bn on future equipment purchases over the next decade.

Quarterly revenue increased 15.6% to JPY2.215trn, but financing costs more than doubled to JPY461.9bn from JPY174.7bn.

Meanwhile, SoftBank's investment portfolio recorded a JPY133.6bn loss, reversing a JPY3.44trn gain a year earlier, despite a JPY245.6bn gain from its Vision Funds.

For the first six months of the financial year, SoftBank reported a JPY768bn net loss attributable to shareholders, compared with a JPY2.924trn profit previously, despite revenue growing 13.3% to JPY4.235trn.

The results come as SoftBank continues to expand its exposure to artificial intelligence, having committed $64.6bn to OpenAI, giving it an ownership stake of approximately 13%.