SoftBank Group Corp. (OTC:SFTBY) (OTC:SFTBF) reported a fiscal second-quarter net loss of 1.12 trillion yen ($7 billion) on Tuesday, reversing a 2.5 trillion yen profit a year earlier.
Higher U.S. AI data center costs, rising financing expenses and declines in investments, including Intel Corp. (NASDAQ:INTC), weighed on results.
Revenue reached 2.22 trillion yen, beating the LSEG estimate of 2.02 trillion yen.
Six-month revenue rose 13.3%, driven by growth in telecommunications and AI computing, CNBC reported Tuesday.
SoftBank Takes $3.7 Billion Hit on AI Data Centers
SoftBank recorded a $3.7 billion writedown tied to nonrefundable advance payments for power-generation equipment for U.S. AI data center projects during the six months ended Sept. 30.
SoftBank made advance payments to secure equipment for U.S. AI data center projects but later changed its procurement plans. The company clarified that the writedown was unrelated to its Ports-Pike project in Ohio.
CFO Yoshimitsu Goto said SoftBank moved early to secure power-generation equipment amid concerns about potential shortages and long procurement lead times.
The company is now reassessing its procurement strategy, Bloomberg reported Tuesday.
Reuters reported that SoftBank could receive up to $2.1 billion in rebates on future purchases.
Despite the broader procurement setback, SoftBank has no plans to downsize its flagship Ohio data center project, which was not affected by the writedown.
OpenAI has agreed to a 20-year lease covering eight gigawatts of IT capacity at the site.
Vision Fund Faces Investment Pressure
SoftBank’s Vision Fund segment posted an 81.6 billion yen loss, reversing a substantial profit a year earlier.
Investment gains totaled about 85.4 billion yen, supported by ByteDance and other private holdings.
However, declines in listed investments, including Coupang Inc. (NYSE:CPNG) and Grab Holdings Ltd. (NASDAQ:GRAB), pressured results.
SoftBank’s cumulative OpenAI investment reached $54.6 billion by September. Its fair value stood at $99.6 billion, representing roughly $45 billion in cumulative gains, according to CNBC.
SoftBank Raises Record $56.5 Billion As Financing Costs Surge
SoftBank raised a record $56.5 billion during the quarter to support AI investments, Reuters reported.
The funding supports expansion across data centers, robotics and OpenAI.
However, financing costs climbed to 462 billion yen during the quarter.
Six-month interest expenses more than doubled to 676 billion yen.
SoftBank ended September with a loan-to-value ratio of 15.9%, below its internal ceiling of 25%, Bloomberg reported.
OpenAI Valuation Could Boost Future Earnings
Management said a higher OpenAI valuation following its latest funding round could benefit fiscal third-quarter results.
SoftBank also plans to expand its AI infrastructure investments.
These include the Ohio data center project and a proposed $1.85 billion initial investment with Grab and PETROS in Malaysia.
However, rising borrowing costs, regulatory risks and changing data center economics remain key challenges, according to CNBC.
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